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How to determine your debts in a divorce

By August 1, 2021August 2nd, 2021Divorce

There are several helpful steps to take before you should consider yourself ready for a divorce and divorce mediation. We discussed the first of these steps in our previous blog, “Pre-Divorce Checklist: Getting your own credit card.”

Now, we turn to figuring out how to determine your debts in a divorce. 

This task is fairly easy compared to some of the other steps our team here at Mediation Northwest recommends pre-divorce. You simply pull your credit report and it will tell you what you owe, to which company, and how the debt is held.

Why do I need to know my credit before a divorce?

Understanding your credit at any point in your adult life is important, but it’s of particular interest when you’re considering a divorce. Why? Keep reading…

  • You may be facing significant costs in the near future due to your divorce, as well as general changes to your financial situation. Filing for divorce doesn’t impact credit scores directly, but late or missed payments definitely could. 
  • Even if you don’t predict any severe changes to your credit, it’s good to know where you (and your spouse) stand in terms of credit before beginning a divorce — and to determine whether you have any joint accounts and how to close them.

How to check your credit score

You may have heard that checking your credit report will ding your credit score. That is an urban myth.

In fact, you can access your credit report once annually from each of the three credit bureaus (Experian, Equifax and TransUnion) without impacting your credit. 

Here’s how to do it:

  • Visit www.AnnualCreditReport.com. (Note: Do NOT go to FreeCreditReport.com. AnnualCreditReport.com is the only website directed by federal statute that allows you three free credit reports per year.)
  • Select the “Request Your Free Credit Reports” button at the bottom of the page.

99% of your debt is shown on a credit report. However, if you owe money to someone who is privately holding the debt, then that debt will not show-up on a credit report.

What should I do about my credit next?

The best way to protect your credit is to find out all that it entails. You will want to know how you hold your debt because if it is in your sole name, it’s easier to manage. 

Joint accounts are the ones you and your partner share liability for. If you have joint accounts, we need to find a solution to get the debt out of one or both of your names — which may or may not be an easy task depending upon your unique situation.

You should monitor the joint account’s activity while both of you still have access, noting recurring charges or any other payments.

Then you and your partner will need to agree to close it. You’ll want to check your credit report again once it’s closed. (Both of your credit scores may dip slightly from closing the joint account, but that should be temporary.)

Mediation Northwest is here to answer your questions

For more information about the pre-divorce process, feel free to download a PDF version of our mediator’s book, “Divorce Mediation in Oregon,” or purchase it from Amazon.

If you have questions, our team is happy to talk you through the process of divorce mediation. Our goal is to help you and your spouse get through your divorce with the least amount of drama possible, and draw up an agreement that works for everyone. Contact us to schedule an initial consultation.