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Protecting your credit in a divorce

It pays to protect your credit record in a divorce. Randolph Stuart Phillips is just one ex-spouse who found this out. Here is some advice from experts:

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  • If you earn less than the spouse you're divorcing, it might be a good idea to apply for credit cards before the decree is issued, says Carol Ann Wilson, president of the Institute for Certified Divorce Planners.

    "Often the credit card companies will issue her a card before the divorce, using his income to help qualify her," Wilson says, adding that discretion counts: "She doesn't call and say, 'We're getting divorced.' "

  • Beware of lingering joint accounts, she says. If a man and a woman have a joint credit card, they both are liable for the balance -- even if one of them promises to pay it.
    • For that reason, Wilson says, savvy financial advisers tell divorcing people to cancel their credit card accounts and get new accounts in one name.

    • Call the creditor to dispute any inaccuracies in a credit report, advises David Mooney, spokesman for Equifax. He says that in most cases involving the authorized user of a credit card whose holder declared bankruptcy, the creditor will stop reporting it.

    • Avoid surprises by being aware, counsels divorce lawyer Lynne Z. Gold-Bikin.

      "During the marriage, people ought to keep aware of what credit cards they have access to. Ignorance is not bliss when it comes to credit."

      In a typical marriage, one partner will take care of the bills. If you're not the bill-payer, don't assume that everything is being taken care of on time, Gold-Bikin advises. Ask questions. Or, to quote a Russian proverb that Ronald Reagan adopted: "Trust but verify."

    Associated Credit Bureaus, the lobbying arm of the credit-reporting industry, recommends that you contact all your creditors and let them know you're getting a divorce. This advice contradicts what Wilson says, and probably works to the advantage of creditors.

    The ACB recommends closing all joint and authorized-user accounts and opening new, separate accounts. The trade group notes that when one spouse opens an account and allows the other spouse to be an authorized user, the person who opened the account is responsible for the payments.

    Ironically, it is this very reasoning that causes Randolph Stuart Phillips to believe that he has a case against the credit agencies for reporting his ex-wife's bankruptcy in his credit record.


    -- Posted: April 14, 2000




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