How to Handle Your Credit During a California Divorce

What You Need to Know About How to Handle Your Credit During a California Divorce

Divorces are tough as it is, and they are a lot trickier when financial disputes arise. Here’s how to handle your credit during a California divorce.

Divorce is hard on anyone, and it may lead one spouse to make financially harmful decisions as a result. To safeguard credit during a divorce, it may be best for spouses to close joint accounts, or at least implement a credit freeze to place a hold on their credit cards.

Important Information About Property (and Debt) During a California Divorce

Types of Property in California

Community Property

Community property means that marriage makes two people, one legal “community.” Property that a couple acquired during the marriage is considered community property. It is generally everything that spouses own together. It includes everything you bought or got while you were married—including debt—that is not a gift or inheritance.

In California, each spouse owns one-half of the community property. Any debt or credit due during a marriage is community property. Unless the couple agrees to divide property in a different manner, the community property part of the debt and credit dues is divided equally.

Quasi-Community Property

Quasi-community property is any type of property that was acquired by either one or both spouses (or domestic partners) when living in another state that, if it had been acquired while in California, would have been considered community property. Due credit is included in quasi-community property.

Separate Property

Separate property consists of any assets or debts obtained before the date of marriage or after the date of separation, including gifts and/or inheritances received at any time. Any unpaid credit accrued before the date of marriage and/or after the date of separation is considered separate property.

Commingling

Sometimes property is considered to be part separate property and part community property. This is called commingling.

What to Do About Credit During a Divorce

When a couple goes through a divorce, one may fear that their spouse will go on a shopping spree or something of the sort, that will leave the other spouse with large debts and bad credit. The following outlines some useful tips in order to preserve credit during a divorce:

1. Make a detailed list of shared debt and credit due.

This will help give a spouse an understanding of what is at stake during the divorce, and what the spouses are responsible for. It also helps to address future disputes in the divorce about what needs to be paid off.

2. Cancel joint credit cards.

It may be helpful to consider placing a hold on any joint credit card accounts to avoid any additional fees or bills during the divorce process. It might be beneficial to let the other spouse know that the cards will be canceled. If credit card cancellations will not work, perhaps it will help to change the status of the joint accounts in order to block any new charges and avoid any huge credit card bills from the other spouse.

3. Obtain a credit report

Obtain a credit report from the 3 credit reporting agencies (Equifax, Experian, and TransUnion) in order to possibly reveal undisclosed debt or unknown credit card cards that will need to be dealt with during the divorce. This is helpful in protecting a spouse’s credit as it will let the spouse know what debt the couple shares. In addition, it might be beneficial for a spouse to take the required steps with credit reporting agencies to ensure credit cannot be taken in the spouse’s name.

Contact Us

If you have any more questions about how to handle your credit during a California divorce, contact us. Get your free consultation with one of our Property Division Attorneys in California today!