As part of the divorce process, it is typically determined who will pay what debt. If you are responsible for some of the accounts, you may be worried about your ability to make payments. (After all, going through a divorce does not leave most people flush with cash.) If this is the case, it is a good idea to contact your creditor(s) immediately. Many creditors are willing to work with consumers experiencing hardship and allow them to make lower payments temporarily. When contacting them, keep the following tips in mind:
- Have a plan for the future. If a creditor feels that you are making little effort to pay your bills, they probably will be hesitant to do anything for you. However, if they know that you are looking for a second job, trying to rent out your spare bedroom, canceling your cable, etc., it may be easier to convince them to provide concessions for a few months.
- Don’t make promises you can’t keep. It can be tempting to jump at any concessions the creditor is willing to provide, but remember, you may only get one chance at help. It is better to be honest and tell the creditor that you cannot make any payment, or can only pay so much, than to promise to send money you don’t have.
- Keep a record. Most people prefer to first contact their creditors on the phone. There is nothing wrong with that, but be sure to keep a record of what was discussed. After every conversation, record the time and date you called, who you spoke with, any actions you said you would take, and any promises the creditor made.
- Be persistent. As the saying goes, If at first you don’t succeed, try, try again. If you call on the phone and the customer service representative says he or she cannot do anything, ask to speak to a supervisor. If that is not effective, send a letter.
If the divorce decree says that your ex-spouse is responsible for paying a debt, you may think that you do not have to worry about it, but that is not necessarily the case. Keep in mind the divorce decree is only between you and your ex-spouse and does not sever your obligation to creditors – if your name is on the account, and your ex-spouse does not make the payments, the creditor can collect from you. (This only applies if you are a joint account holder, not an authorized user.) The payment history for the account can also still be reflected on your credit report.
So, what can you do? One option is to ask the creditor to remove your name from the account. They may or may not agree. Another option is for your ex-spouse to pay off the old debt with new debt in his/her name only (for example, refinance the house or do a balance transfer on a credit card). However, this may not work if your ex-spouse has a poor credit history. As a last resort, you can monitor the account on-line (most creditors let you do this) and make the payment yourself if your ex-spouse fails to pay. This will prevent a late payment mark from appearing on your credit report. You then may be able to collect the money you paid from your ex-spouse under the divorce decree. (Talk to your lawyer for more information.)
Take the time to check your credit report to assess how the debt is affecting your score.