Hey, this is Casey Lown with Strategic Mortgage Solutions here for another divorce mortgage planning moment. Whether you’re preparing for an amicable divorce or a nasty one. Divorces have a way of having a lot of ups and downs and are rarely simple. And so, maybe there are some financial difficulties, and negative credit events that have come a long way, that you can prepare for. So let’s jump right in and review six strategies that can help protect your credit and safeguard your finances.
1. Pull Your Credit
You want to pull your credit. You want to see exactly what debts are in your name, and what you may have together jointly. Have a frank conversation with your divorcing spouse about these debts and create a plan about who’s to pay what, in some cases, you may actually want to consider setting up a separate joint account where you may both mutually fund money to that account.
2. Set Up Autopay
I’d recommend setting up autopay on the vast majority of your debts and other bill obligations. The thing of it is, is that when you’re going through a divorce, those ups and downs, emotional roller coasters, it’s very easy for certain bills to just slip right by you. At least if you have things set up on autopay, the vast majority of your expenses will be paid without you giving much thought to it.
3. Delete Authorized Users
Get rid of any accounts where you have authorized users. Or at least take that person off from having the ability to charge an account that you’re obligated to make the payments on.
4. Protect Your Credit
Next, freeze your credit. Now, I actually recommend this for almost anybody these days because data theft is so prevalent with a lot of people that have and can control your personal information, Social Security, date of birth, name, and yadda yadda. However, when you’re going through the process of divorce, especially one where maybe it’s getting a little nasty, freezing your credit is a great idea to prevent somebody from opening up fraudulent accounts against you that maybe later on down the line are going to suck away a lot of your time and energy in having to fix those situations.
You want to understand who’s ultimately responsible for these debts that you might have together. There are situations in a divorce settlement agreement that may outline somebody has to pay a car loan. Somebody has to pay the mortgage. Somebody has to pay these other credit card debts. However, if you have these accounts together jointly, it doesn’t matter whether the divorce decree outlines who has to pay what, from the creditor’s standpoint, both parties, whoever’s on that debt as an obligation, is responsible for those debt payments. So if your divorcing spouse is obligated to pay the car payment and skips making the payment, that’s on you as well, and it will be on your credit. So it’s recommended that after the completion of a divorce, try to get each and every creditor out of both names and into the individual that’s obligated for that debt within that divorce settlement agreement.
6. Seek Advice from a CDLP
And lastly, if you own a home and you’re considering whether to keep it, how would you buy somebody’s equity position? Should you sell it? Am I going to qualify to be able to purchase the home after the divorce? You going to want to seek out the advice of a divorced mortgage planner such as myself. The reason is that an attorney is going to be really good for helping you discuss your options as it relates to the legal issues of that divorce and concierges you through that process, but they know next to nothing about how mortgage financing and the underwriting process works. You’d be amazed at just how significantly a few changes in the wording of that divorce decree can affect somebody’s ability to be able to qualify for financing after a divorce.
Once more, a divorce mortgage planner could perhaps give insight into other financing opportunities that could help somebody in a case where they’re deciding whether to buy out somebody’s equity position. Can they qualify for that loan? And therefore, what if they can’t? You know, these things are really important to discover and sort of work out prior to the actual negotiation of the divorce with both parties.
Anyway, that’s it. I hope this is valuable for you and helps you to protect your credit. Have a great day.