Credit Protection Strategies for Divorce

Divorce is emotional — no way around it. While your friends try to be there on the personal side, the financial side is just as important, especially when it comes to joint debt. How you navigate this can have a lasting impact on your credit score and overall financial stability.

Still, whether you’re in the midst of a divorce or just beginning the process, a thoughtful plan can help protect your credit and move forward with confidence.

Step 1: Understand how joint debt affects your credit

Creditors don’t care about your divorce. If your name is on a loan or credit card, you’re legally responsible. A missed payment by your ex can hurt your credit just as much as if you missed it yourself.

Your credit score is your financial passport. It may affect everything from securing a mortgage to renting an apartment, and even applying for jobs. Protecting it during this transition is a smart, self-protective move.

Step 2: Make a complete list of joint debts

Before you can divide anything, you need the whole picture. Create a master list that includes:

• Mortgages
• Car loans
• Credit cards
• Personal loans or lines of credit
• Student loans
• Any other debt in both your names

Pull your credit reports from all three bureaus (Equifax, TransUnion, Experian) to catch anything you may have forgotten. The next step would be to create a spreadsheet noting the lender, balance, monthly payment, and the name of the account holder.

Step 3: Determine who will be responsible for each debt

Once you’ve identified everything, the next step is assigning responsibility and be honest about who can reasonably afford what.

If one person plans to keep a shared asset, like a home or car, it may make sense for them to assume the associated debt. For instance, if the mortgage on a jointly owned home is modest and one spouse intends to remain in the house, the couple might agree to pay off the loan together and then adjust the division of other assets, such as cash or investments, to maintain overall fairness.

The division of debt in divorce varies from state to state. Some follow community property rules and split debt equally, while others apply equitable distribution and divide it based on what the court deems fair. In equitable distribution states, the higher-earning spouse often takes on a larger share of the debt, especially if they have a greater financial capacity, even when both parties previously held the debt jointly.

Step 4: Notify your creditors

Once you’ve agreed on who will take responsibility for each debt, the next step is to contact your lenders directly. Start by calling each creditor to explain the situation. In some cases, they may allow you to remove one party from the account, refinance the loan, or transfer the balance to a new account in the responsible party’s name.

Be sure to follow up in writing to create a clear paper trail. If one person is assuming full responsibility for a debt, confirm that the lender has updated accounts accordingly. Without written confirmation, both parties may remain legally liable, regardless of what is stated in the divorce agreement.

Step 5: Document everything

Verbal agreements aren’t enough, especially in the emotionally charged context of divorce. Your divorce decree or separation agreement should clearly outline who is responsible for which debts. If you anticipate potential enforcement issues or if problems arise in the future, consider seeking a court order to make the division of debt legally enforceable. For instance, if one party repeatedly misses payments on a loan they agreed to keep, a court order can give the other party legal recourse to protect their financial standing.

In addition to formal agreements, it’s important to keep thorough records. Save all emails, account statements, and communications with lenders and your ex-spouse. Good documentation creates a safety net.

Step 6: Protect your credit score

While navigating joint debt, it’s equally important to take steps that safeguard your credit. Start by opening accounts in your name — a solo credit card or utility bill can help you establish an independent credit history. At the same time, focus on reducing or eliminating shared debts. If possible, pay off joint credit cards and close the accounts. Alternatively, consider consolidating your share of joint debt into a personal loan.

For example, as a hypothetical for illustrative purposes, if you’re both responsible for a $10,000 credit card balance, you might each transfer $5,000 into separate personal loans or balance transfer cards in your names. This clean break simplifies accountability. Finally, make it a habit to monitor your credit report regularly.

Step 7: Close or transfer joint accounts

Once you’ve agreed on debt division, it’s time to disentangle your shared financial life. For credit cards, the cleanest solution is to pay them off and close the accounts. If that’s not possible right away, one party may be able to transfer the balance to an individual card. The same principle applies to auto loans — if one of you is keeping the car, refinance it into that person’s name.

The home is often the trickiest shared asset. If one person plans to stay, refinancing the mortgage into their name and removing the other from both the loan and title can prevent future complications. If refinancing isn’t feasible for either party, selling the property may be the most practical route. Whatever the solution, always get written confirmation that names have been officially removed from closed or transferred accounts.

Step 8: Follow through and move forward

Stick to your agreements and continue making payments on any debts still in your name until the transfer is complete or the balance is paid off. If your ex isn’t upholding their end of the deal, don’t hesitate to seek legal support — it’s your credit and financial stability on the line.

With a proactive mindset and careful planning, you’re not just closing joint accounts. You’re reclaiming your independence, one wise decision at a time.

This content is for informational and educational purposes only and should not be construed as individualized advice or a recommendation for any specific product, strategy, or course of action. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. This material is not intended to, and does not, create a fiduciary relationship under ERISA or any other applicable law. For individualized advice tailored to your specific circumstances, please consult with your adviser.