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Protect Your Credit in a Divorce

10 ways to safeguard money when relationships end

En español | Divorce can be unpleasant, particularly if your breakup occurs past the age of 50. There's the emotional sting of dealing with a failed relationship late in life, the challenges of dating again and starting over as a single person, and of course, financial issues to tackle.

Quiz: Your credit after a divorce

Unfortunately, money matters can sometimes take a backseat to the personal drama that unfolds during a divorce. If you're separating from your spouse — or plan to — you need to protect your finances as best you can, especially your credit standing.

Here are 10 ways to safeguard your credit and finances in a divorce.

1. Close joint accounts immediately

Since joint accounts are held by you and your spouse together, both of you are equally responsible for the debt, no matter how it is distributed in the divorce. "If an account is left open, your ex can add more debt, make a late payment, miss a payment or default, and you will also be held responsible," says Bill Hardekopf, a credit expert and CEO of LowCards.com. "The creditor reports account activity to the credit bureau in both of your names. This affects the personal credit score for both individuals."

Man and woman holding toy house split in half.

If you and your spouse are separating, protect your finances to keep your credit in good standing. — Peter Dazeley/Getty Images

2. Notify creditors about your divorce

After you close any joint accounts, send a certified letter notifying your credit card companies, banks and other lenders about your divorce.

"Ask them to provide a current account statement and tell them that you do not intend to be held liable for any debt accumulated after the date of the written letter," Hardekopf says. "Request that they put the account on inactive status so no new additional charges may be added, and stipulate that once the balance is paid in full, the account is to be closed completely."

If your spouse is an authorized user on any of your individual accounts, or you're an authorized user on spouse's accounts, each of you should remove the other from the accounts. This will reduce the risk of either party racking up new, unauthorized debts. Again, revoke the authorization on the account via certified mail.

3. Get monthly statements

For any accounts with outstanding balances, insist on getting copies of the monthly statements sent to you. Do the same thing for any accounts you are unable to close or want to keep open for whatever reason. This way, you'll be able to keep track of the accounts and know that timely payments are being made.

4. Don't fight tooth and nail for the house

"A lot of times in divorce, especially for women, they want to stay in the marital home because that's where they've raised the kids and they have emotional attachment to the home," says Alan Frisher, head of Sage Divorce Planning LLC and codirector of Florida Alimony Reform, a nonprofit that raises awareness about money-related divorce issues.

In times past, clinging to a home post-divorce may have made sense, especially in areas where properties were appreciating and homeowners were building equity. But it's a far different real estate market now. Older Americans, in particular, are often cash-strapped and dealing with big housing debts.

"Now, you have to be sure you can really afford the home because it's often more of a liability than an asset," Frisher says. "It's not about who will keep the home, but about who will move on from the home. And that's simply because of the debt surrounding the house."

5. Keep your address up to date

If you move out, your creditors aren't the only ones you should notify about your divorce. You should submit a change of address card at the post office or update it online at usps.com. This way, any bills, credit card statements or other financial correspondences addressed in your name alone will be forwarded to your new residence. The last thing you want is to miss a payment on a credit account because you forgot about the bill or your ex didn't let you know the mail was just sitting there in your former home.

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