7 Steps to Protect Your Finances During a Divorce

We all hope it never happens to us. The “D” word.  Divorce.

It’s a sad fact that lots of marriages end in divorce, and sometimes the relationship is contentious and hostile. If you are facing divorce, protect yourself and your finances with these simple tips:

1.  Keep detailed records.  The first step is to commit to making certain that all financial arrangements and obligations are well-documented.  If you end up having problems with a creditor for a debt that is not your responsibility, documentation can help clear the issue up faster and with less effort.

2. Dissolve every joint account.   This is one of the biggest mistakes that divorcing couples make. One person will keep a joint account, and the other person finds out months or years later that the account has been paid late or sent to collection. Be aware that divorce decrees do not supersede contracts. In other words, if you and your ex split certain debts in the divorce, but your name is still on the debt, YOU ARE STILL RESPONSIBLE FOR THE PAYMENT OF THAT DEBT.  This is a biggie, and can completely tank your credit score and ruin your finances.

Remove your spouse’s name on any accounts that you plan to keep (such as your car, etc). Move the utilities and any other bills into one name. If you share joint credit cards, divvy up the balance and open a credit card in just your name, and transfer the balance over to the new account. BE SURE all joint credit cards are closed.

3.  Sell the house if possible. The best idea is to sell the house and split any profits. It is imperative to not walk away from your house with your name still on the mortgage.  If selling the house is not an option, the person who ends up with the house needs to refinance it in his/her name alone as quickly as possible.

4.  Divide all assets. Split all cash, property, and any other assets during the divorce. Do not share assets with an ex.

5.  Be on guard online.  An ex can do some real damage when armed with passwords to bank and credit card accounts. The first action should be password protecting your computer and your cell phone (this will ensure your ex does not add a sneaky spyware).  Change ALL of your passwords on all of your accounts to something your soon to be ex would not know. Do not use birthdays, anniversaries, mother’s name, dog’s name, or anything else that your former beloved would be able to figure out.  Phrases like “bobpleasedie” or “lovereallystinks” probably aren’t good ideas, either.  A long password (10 characters or more) with letters in upper and lower case and numbers is the best option.

6.  Check your credit report. This is a good all-round rule for everyone. However, it’s especially important after going through a divorce.  Pull a credit report every 3-4 months, and scour it to make certain all joint accounts are closed and that there are no accounts you do not recognize. Follow up on any errors and get them cleared up immediately.

7.  Change your will and life insurance beneficiaries.  When moving on after a divorce, make certain to review all important documents, and implement changes where necessary. Remove the ex’s name from your will and any insurance policies in which he/she is named.

Divorce is never a fun endeavor. However, by being educated about the financial facts and following these simple tips, you can make it much easier to move forward and avoid the financial pitfalls that many people fall into when ending a marriage.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Credit Score Health: Common Conditions that can Tank your Score

A credit score is a measurement to determine your credit worthiness, and we should all strive to keep ours as HIGH as possible. This means managing our payments, watching our credit card balances, and not frivolously applying for new credit.
However, certain seemingly innocent actions can result in credit score decreases. Do you recognize yourself as having any of these “conditions”?
The “I gotta have it-ache”. A new fishing rod, a great pair of heels, a beach vacation. We all have the budget breaking Achilles heel. While splurging every now and then won’t be detrimental, a habit of treating yourself to everything that catches your eye can damage your credit score. Overspending can result in maxed out credit cards, which can lower your credit score (remember, credit utilization accounts for 30% of your score). Another result of over-extending can be not being able to pay your bills on time. If you begin paying bills late, your credit score will definitely pay the price.
The “I’ll worry about it tomorrow-itis”. Procrastinating on making a budget or delaying facing your mounting bills is a sure fire way to sink your credit score. A few missed payments along with a few bad purchases can cause a mess that will take you months (or YEARS) to recover from.
The “I can’t miss a deal-phobia”. 20% off if you open a credit card! Ends today! If either of these speaks to you, this may be a problem. Department stores often offer discounts for opening a new credit card, and these show up on your credit report as an inquiry. Too many of these can have a very negative effect on your credit score.
The “It will work itself out-flu”. Collection calls, liens, lates, OH MY! These are credit score tankers and they need to be dealt with thisveryminute! There is a chance that they are erroneous, and could be removed from your credit report with a little effort on your part. Letting them linger on your credit report will send you straight out of 700 and 800land into 600 or 500ville. And nobody wants to live there.
The best remedies to get and keep a high credit score?
Think about your purchases. Being impulsive with money is going to lead you down a debt-ridden path. If the object of your desire costs more than 1% of your monthly income, think about it for at least 24 hours and figure out how you are going to pay for it.
Always keep your budget on your mind. Write out a monthly budget so that you know how much extra money you can spend every month. This will keep you making your payments on time and your debt manageable.
Just say no to marketing. Don’t be swayed to buy something or open credit lines you don’t need because of a great sale or discount. If you weren’t looking for it before you walked into the store, chances are you can live without it, no matter how great the ‘deal’. Your financial future is more important than saving a few bucks.
Keep your head out of the sand. Big credit problems such as collections and liens will not vanish by themselves. Make sure you are checking your credit report regularly. Never assume that creditors will realize they have made a mistake and then take steps to correct it on their own. Jump in and get any erroneous information handled immediately.
     The health of your credit score depends largely on your ability to control your impulses when shopping. Keeping a handle on spending and seeing your big financial picture will help keep your credit score healthy and in top form.

~~Susan McCullah is the Product Development Director for Data Facts, a 22 year old Memphis-based company that provides mortgage product solutions to lenders nationwide.