Selling While Divorcing
Protecting Your Credit During a Divorce & Settlement
Even the divorces and breakups that start out amiable, can eventually turn sideways – if not completely, inside-out – despite well intentioned efforts to remain civil. Regardless of who was wronged, who was innocent, how the blame is divided, or whether the union simply drifted apart, it’s a death of a relationship, a time to mourn. It’s also a time of rebirth and of new life.
So, don’t get sidetracked. Although your “better half” may be out of the picture, your finances will follow you wherever the future leads you. Advise I’ve heard over and over again… “You can always find another boy/girlfriend, but it’s damn hard to find another place to live.”
Steps You Can Take to Protect Your Credit
1. Obtain Your Credit Report. You can get a copy of your credit report by notifying each of the three credit bureaus; Experian, TransUnion or Equifax, or you can obtain a free copy of each report online by copying and pasting this secure line into your browser: http://annualcreditreport.com.
2. Inventory Credit. Make a list of all creditors, secured and unsecured. Secured creditors are those that attach an asset as security for the debt. If your home is mortgaged or you have a loan on your car, for example, your home and car are assets used as security. Unsecured creditors are those that lend you money based solely on your promise for repayment, like your credit cards.
3. Separate Joint Accounts from Individual Accounts. Joint accounts are those containing both names, and each of you is responsible for the debt. Individual accounts are those opened solely in your name.
4. Call Joint Credit Call Lenders. Find out if the credit extended is based on your credit or your partner’s credit. If the credit is based on your credit, but your partner has a card, ask to have your partner removed. If the credit is based on your partner’s credit, ask to have your name removed, close the account and open a new account. If you have a balance on your credit card, the creditor will not close the account unless you pay off the balance. But you can prevent further charges on the account by asking for the account to be frozen.
5. Sell or Refinance Secured Assets. It is important to separate the liability for secured assets. If a car is financed in both names, regardless of whose name is on the title, both of you are responsible for the loan. If a mortgage is held in both names, regardless of whose name is on the deed, both of you are responsible for the mortgage. Even if your divorce decree assigns possession of those assets to one party, or if one of you voluntarily transfers title to the other, the liability for the loan will remain if you do not sell or refinance the asset.
Refinancing Your House
Should you reach an agreement whereby one person will remain in possession of the home, then the prudent course of action is to remove the existing loan and replace it with a new loan, providing of course, that you lack the capital to pay-off the loan in cash.
This is a favorable option if interest rates have dropped from the initiation of the loan.
1. Record a New Deed. Ask your lawyer or title company to draw up a deed that transfers title from one person to the other. Commonly used deeds for this purpose are “quit-claim” deeds, but your lawyer may prefer to use a warranty deed or a grant deed.
2. Obtain a New Mortgage. Places to get a mortgage include your bank, your credit union, or through a mortgage broker.
Getting a Divorce is unpleasant and challenging enough. Contact TEAM SOCHA for a confidential, professional and prompt solution to selling a home during divorce. 310 357-1454
Member of Divorce Advocacy and Referral Network.