How to Separate Finances and Credit Cards in Both Names During a Divorce
You and your spouse have equal access to joint mortgages, credit cards and other types of loans and you are equally responsibility for repaying these debts. If you fall behind on debt payments during the divorce proceedings, the record of the late payment will hurt both your credit score and your spouse's. You should attempt to divide your debts as quickly as you can to avoid confusion, although reaching agreement with your lender and your spouse can prove difficult.
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Instructions
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Gather together all of your bank statements, credit card statements, loan payment books and records of any deferred debts that you and you spouse took out while married. If you and your spouse have already separated then some of the joint debt statements may get mailed to your spouse's home. Ask you spouse to gather information related to any such accounts.
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Meet with your spouse and use a calculator to add up your total debt. Divide the debt amount into two and then try to split your debt liabilities between you and your spouse so that you each take responsibility for half of the debts. Interest rates on your credit cards are likely to vary. Therefore, you should attempt to make the debt split equitable although dividing the debt into two precisely equal portions may prove impossible.
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Ask your lawyer to draft a marital settlement agreement once you and your spouse have reached agreement on the debt divide. Your lawyer must submit the agreement to the divorce court, and the agreement will take effect when the court issues the final judgement.
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Contact your credit card lenders and ask to have your spouse's name removed from the jointly held cards that you intend to repay and to have your name removed from the other cards. Your spouse should do the same. The lender may refuse to sanction the removal of your names if you lack sufficient income to repay the debts by yourself or if you have poor credit. If this occurs, submit individual applications for new credit cards and use the new cards to payoff the joint accounts. If you cannot qualify for new credit cards, then continue to repay the existing debts.
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Submit a quit claim deed at the local county courthouse to transfer ownership of your home from you and your spouse to just one of you. You cannot file this deed until the divorce judgement has been finalized. Once you have transferred ownership of the home, the spouse who intends to remain in the home can submit a refinance application.
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Tips & Warnings
In states with community property laws, any debts that you took out while married are regarded as joint debts even if one one spouse's name actually appears on the account. Therefore, you must split debts that you took out while married even if only one of you actually established and has access to the account. In such situations you may end up having to give cash to your spouse to make the payment even if the debt only appears in your spouse's name.
The divorce court may instruct you to refinance your home as a condition of the mortgage agreement. However, if you cannot qualify for a refinance loan in your own right then the joint mortgage must remain in place until you have repaid the loan. This means that if your spouse gets to keep the home, your spouse must pay the mortgage. If your spouse defaults on the mortgage then it impacts your credit even though you no longer have ownership rights on the home.
