A divorce can be complicated when it comes to addressing your current debt, however with a little planning, you can prevent your credit from being compromised during this process.

First, I want to emphasize that the divorce itself has no bearing on your credit. If you still have time, I encourage both parties to obtain copies of your credit report individually from each bureau (Experian, Equifax and TransUnion) through You are entitled to a free credit report from each bureau every twelve months. This will allow you to determine which accounts you share (joint accounts) along with your current credit standing for each account.

If you have joint accounts with your ex you may have some challenges. In regards to credit, the divorce decree has no relevance even if the debts listed in the decree state they are the responsibility of your ex-spouse. The divorce decree does not replace the original agreement between you and the creditors. For example, if you have a mortgage together and your spouse is awarded the house in the divorce decree, it will continue to show on your credit report. Any late payments on the mortgage will still reflect on your credit.

I recommend you separate all joint accounts before you start the divorce process or they will continue to report on both of your credit files after the divorce is final. Refinancing is the only way to remove someone from a loan. This will require you to refinance your mortgage and auto loans in only the name of the responsible party. A few credit card companies will allow you to convert the account to an individual account. However if they will not agree to this, then it is best to close the account and open a new account in only your name. Again, if your spouse is awarded the credit card in the divorce decree and you keep the account open as a joint account, any late payments will affect your credit as well.

Authorized accounts are different since your spouse may not have access to the actual credit card, but the can still use the account since the account number is still known to him or her. I encourage you to have your spouse removed as soon as possible if they are an authorized user. This usually does not require you to close the account.

While your cell phone, utility bills, etc. do not report to the credit bureaus, you want to make sure these are switched over to either you or your ex-spouse. If your spouse stops making payments on these accounts and they are still in your name, they could be sent to a collection agency which will negatively report on your credit file.

If for some reason you decide to keep a few joint accounts open, I encourage you to sign up for a monitoring service through one of the credit bureaus (Experian, Equifax or TransUnion). This will allow you to verify these accounts are being paid on time. You can also determine if any accounts are opened in your name without your permission.

This should help you avoid walking away from a divorce with bad credit.

Jim Kaiser

Branch Manager, NMLS #1721861

Cherry Creek Mortgage, LLC, NMLS 3001