Saving your credit can be difficult, especially if your ex is no longer making credit card payments.
I recently worked with Sandra who separated from her spouse a few years ago. Her ex-husband agreed to pay off the couple’s $ 60,000 credit card debt, and they made the deal part of their official divorce decree. Sandra thought that was all over.
Unfortunately it wasn’t.
She was persecuted by creditors because her ex missed payments, and all of the late payments ruined her creditworthiness. She couldn’t even qualify for her own credit card as Sandra’s ex was the primary credit card holder and she was only a secondary user of the credit account. Sandra never thought of asking if she would credit all of the on-time payments she’d made at their wedding.
Unfortunately, Sandra’s financial advisor forgot to mention that setting up your own loan – on your own behalf – is crucial. When your entire credit report is based on shared credit cards and bank accounts, your spouse’s debts can follow suit – even in the event of a divorce.
Fortunately, Sandra decided that she no longer wanted to work with her ex-husband’s advisor and called me. We worked together for years and she eventually set up her own bank accounts and credit cards. It’s been a long process, but it’s worth it for both Sandra’s financial well-being and general calm.
Here are a few highlights of how Sandra was able to take control of her financial future.
Tips for Saving Your Loan After a Divorce
1. Contact with the creditor
We called the creditor and asked her to write in Sandra’s file that she had separated from her spouse. Next, we explained that Sandra would like the account to be treated as agreed in their settlement.
2. Follow up
After our phone call, we followed up with a letter summarizing the conversation and our instructions. We asked them to send us written confirmation that they took the action we requested.
3. Make sure the bills are paid
This is the key. Divorce negotiations can take months and all you need is late payment to hurt your credit score. Sandra started making minimum payments into accounts her spouse was responsible for and spoke to her lawyer about compensation.
4. Request documentation
Once her spouse made on-time payments, we asked the lender to send Sandra the credit statements and payment coupons so she could see if her ex was behind schedule and possibly intervene before her credit suffered.
5. Close the account
We also checked that your ex is closing the credit card and transferring the balance to a new credit card only on his behalf. Unfortunately, this was not possible because his credit history was detected and he does not qualify for an unsecured credit card.
If you find that your ex’s bad financial habits are putting your own credit at risk, I recommend that you take the same steps to save your credit.