Part 2: Protect Your Financials
Regardless of where you are in the process, it’s never too late to take steps to protect yourself. When you’re divorcing or in a custody dispute, it can affect the rest of your life.
Each of these suggestions should take about 15 minutes to start. Some may require more time to fully complete. Ready to get started? Let’s dive in…
- Get a copy of your credit report. It’s free! I don’t mean to check your credit score, I mean to get the actual, 20+ page report with all the accounts and payment information. Save it as a PDF and keep it secure. You are entitled to a copy of your report for free at least 1 time per year from each of the 3 main credit bureaus. There are also many sites that will charge around $10 for this service. This should show you (or your lawyer) what credit accounts you are showing up as personally responsible for. Make sure that everything looks right and that you are aware of each account. Unless you intend to do so, make sure you aren’t signing up for a subscription with any of the paid credit report agencies.
- Credit monitoring services. Many credit cards will provide you with a free credit score either monthly or with ongoing monitoring. This will not tell you the detailed information that a credit report will (see #6 for that) but checking it for changes should alert you to any concerning activity such as a late or nonpayment of a joint bill that your ex is supposed to be responsible for. Most people don’t know that there is no “cash value” to your credit score within a divorce which means that if your ex destroys your credit, you may be unable to rent, refinance, or secure credit or it may cost you in higher deposits or higher interest rates. While nonpayment can be addressed within the case and may even be justification for seeking court orders in certain circumstances – you do not want to have to find out the hard way that there aren’t good options available afterwards.
- Consider having new credit cards issued or freezing your current accounts. Many credit card companies will let you put a temporary free on use of your credit card so that additional charges won’t be allowed. You can also request that the credit card company or bank reissue the card (do not close the account as this will limit access to records and can violate automatic court orders). However, having a new card number issued like the companies do when you’ve lost your card can assist in keeping your ex from spending on cards that are in your name alone, or enforce agreements or court orders not to have additional spending on joint credit cards. Before you do this – make sure to check what bills may be set for autopayment that limiting the use may impact and make other arrangements. I also don’t suggest this without first discussing it with your spouse if it is a joint card, they are the primary user, or they are financially dependent on the account. In that case, stop using the card as soon as possible so it will be clear that discretionary charges were from them. You can open a new account in just your name and use that for ongoing, non-community debts.
- Obtain and save copies of your bank account and credit card statements. Go online and download copies of all the account statements that you can – bank accounts, credit card statements, retirement accounts, mortgage statements, and car loans, etc. Ideally, you would gather at least 2 years of statements (if the account has been open that long) and statements that cover all the significant dates involved in your case (when you married, when you separated, times of purchase or refinance among others). You will want at least a year prior to separation through the current date if possible. If you can access the statements, getting a copy of the statement at the time of marriage (if already opened when you were married) or the first statement when it was opened (if after marriage) can be helpful to show if debt was brought into the marriage or not. Keep copies of these documents electronically in a safe place where they can’t be taken, lost, or your efforts might be seen by your ex, such as an online storage drive. Free or low-cost options include Google drive and Dropbox, among others. Keep them organized and updated if possible.
- Open a new bank account. Once you’ve separated, the accounting of whose money belongs to who can get complicated. Opening a new account in just your name, generally one at the same bank so it’s easy to transfer funds, can be helpful to keep this accounting clear. Have your ongoing income deposited to this account. If possible, pay your ongoing expenses from this account. If necessary, deposit into this account and then transfer to a joint account to show that the funds were your contribution.
Remember – every situation is different! Before starting, consider what is safe for your specific situation, especially if you currently reside together, there is domestic violence, or you share accounts and changes will notify or impact your spouse. The idea is to inform and protect yourself, not to harm the other person.