Financial stability is important to most Arizona families. Whenever divorce enters the picture, financial stability can become a concern. Most husbands and wives have joint credit accounts ,which may include mortgages, car notes, credit cards and more. While who is responsible for which debts will be addressed in the divorce decree, creditors will look to both individuals for repayment of the joint debt.
One step that can be taken to protect one’s credit is to close joint credit accounts. If possible, the balance on the account can be paid off or transferred to an account solely in the name of the individual responsible for repayment. With larger accounts, such as a mortgage, it may be necessary for one individual to refinance the home in his or her name. Or, it may be better to sell the residence and use the proceeds to pay off outstanding debt.
It may not always be possible to convert joint accounts to individual ones. If this is the case, one will want to recognize that even though the other individual may be responsible for paying a debt according to the divorce decree, if that payment is late or goes into default, it will affect the credit of both individuals. When it is not possible to convert the joint accounts, one will want to keep an eye on these accounts to make sure that they are handled appropriately.
Another step that one will want to consider is placing a freeze on the individual’s credit report with each reporting agency. This can be a vital step if one’s disgruntled spouse attempts to open credit accounts with the other’s information. A freeze can prevent this from occurring. Divorce can impact the Arizona resident’s credit; however, by being proactive, it is possible to minimize any negative consequences.