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A divorce can be financially complex, and the couple must have an accurate accounting of debts and assets for equitable distribution. But with most divorces taking up to a year to complete from filing, financials can become muddled. That is why it is important to address shared accounts and credit cards at the beginning of the process of filing for a divorce.
Rosenblum Law divorce attorneys can assist those considering divorce address these shared accounts by providing legal advice and representation in negotiations. Contact us today for a free consultation, or keep reading for more information on how to handle shared accounts and credit cards.
Identifying and Assessing Shared Accounts and Credit Cards
The first step in addressing the financial complexities of divorce is identifying and assessing shared accounts and credit cards. There may be a variety of shared accounts, including joint bank accounts like checking and savings, joint credit cards, and other shared financial accounts such as investments and retirement accounts.
It is important to have accurate documentation of these accounts. Gather statements and transaction histories for joint accounts and identify all shared liabilities and assets. This information will also be needed when one files for divorce. Gathering statements and transaction histories will help identify accounts that should go to one spouse or the other.
Steps to Handle Shared Accounts and Credit Cards
There are a variety of steps one can take to handle shared accounts and credit cards.
Freezing Joint Accounts
If it is possible that the other spouse might try to continue to use accounts, one should freeze the accounts until a divorce decree or divorce settlement is made. One can freeze bank accounts by contacting the bank and letting them know divorce is being filed and requesting to have the accounts frozen. This will prevent either party from withdrawing funds. One should also contact holders of investment and retirement accounts and request that these be frozen as well so that they can’t be cleaned out.
Opening Individual Accounts
One still needs to be able to manage finances during a divorce. Open individual accounts for deposits and banking. It may be a good idea to open a new individual credit card as well. It is important that one uses their own funds to open new accounts instead of using money from joint accounts before freezing them, as this could result in financial disputes.
Separating Finances
Untangling joint finances requires several steps. One will need to transfer direct deposits and automatic payments to individual accounts. The quickest way to detangle joint finances is for both spouses to agree and visit the banks together. This way the assets can be mutually divided and the joint accounts closed.
An important step in untangling joint finances is deciding who will remain in the marital home. If there is a mortgage attached to the home, the spouse who keeps it will need to refinance the mortgage in their name only.
Paying Off and Closing Joint Credit Cards
It is important to close joint credit card accounts to avoid future liabilities. One can contact the credit card issuer and let them know divorce is being filed and that the balance needs to be paid off in full. Many credit card companies will offer settlement for lower than the amount due. Joint credit card accounts may be able to be canceled by just one party, but it depends on the bank and provisions of the credit card.
Monitoring Credit Reports
It is important to get a copy of one’s credit report to help identify assets and liabilities that need to be settled in the divorce. Signing up for credit monitoring will help one avoid discrepancies or unauthorized activities. If one sees a new joint account opened that they did not authorize, one should contact their bank and refute this immediately.
Legal Considerations and the Role of an Attorney
Legal Guidance and Representation
An experienced divorce attorney has understanding of state laws regarding marital property and debt. They will be able to protect one’s financial interests by applying these laws to the debts and assets in the marriage. They can provide legal guidance for dealing with joint accounts, and provide representation in meetings and negotiations.
Negotiating and Drafting Agreements
An attorney can represent their client during negotiations and craft fair and equitable division agreements. A separation agreement can be drafted and filed with the courts to assist in dividing joint accounts and assets before the divorce is finalized. The agreement should include provisions for handling shared debts and accounts in divorce settlements.
Mediation and Collaborative Law
Mediation and negotiations are common in divorce settlements, and they are a great way to address financial issues and avoid settling the issue in court, which is more costly and time-consuming. Mediation is led by a licensed mediator and each party is represented by their own attorney. This formal negotiation makes it easier to divide property, assets, and debts in an agreement that is beneficial for all.
Enforcement and Compliances
Once an agreement is reached, the attorney can ensure both parties adhere to the agreed-upon terms. If one party fails to comply, one can file a motion with the courts to ensure compliance. This could lead to temporary orders that remain in place until the divorce is finalized.
Tips for Managing Shared Accounts and Credit Cards During Divorce
There are several advisable tips that those thinking of divorce with shared accounts and credit cards should consider:
- Stay Organized: Keep detailed records of all financial transactions and communications. Make sure you note the date, who you spoke with, and the outcome of the interaction.
- Communicate Clearly: Maintain open and clear communication with your spouse, if possible. The more you can agree on how to handle joint accounts, the easier it will be to disentangle your finances.
- Seek Professional Help: Engage financial and legal professionals to navigate complex issues. A divorce attorney can provide most of the assistance you need in this area.
- Prioritize Your Financial Health: Focus on securing your financial future and rebuilding credit. Open individual accounts and individual credit cards as soon as possible.
FAQs
The first thing you should do when managing shared accounts during a divorce is to freeze joint asset accounts so that they can’t be cleaned out. One should then open individual accounts and move direct deposits and automatic payments to the individual account.
You cannot close a joint bank account without your spouse’s consent. All account holders must agree and consent to ownership changes. However, you can request that the bank freeze the accounts in preparation for the divorce. It’s also wise to check with your bank’s policies, as some banks may allow account closures under certain conditions if there are serious concerns about the other user misusing the account.
The easiest way to decide who is responsible for joint credit card debt is for the debt to be divided between the parties. This can be done by each party taking on the debt for one or more credit cards, or by determining how much of the credit card debt will be paid by either party. Negotiations and mediation are the easiest way to handle these matters, and it’s important for each party to have an attorney to ensure that any agreements made during mediation are fair.
The individual keeping the marital home will need to refinance the mortgage in their name only. If refinancing is not feasible, other arrangements may be necessary, such as selling the property or restructuring the mortgage in the divorce agreement.
Yes, you should notify creditors about your divorce. Avoid paying joint debt until you have made an agreement with your spouse about how debt will be divided.
Make sure that all of your bills are being paid throughout the divorce process. This includes the mortgage and any other essential bills. One should also carefully monitor credit reports to ensure that joint accounts are handled appropriately.
The only way to stop your spouse from using joint accounts without your permission is to contact the bank and freeze or close the accounts. Closing the accounts requires the consent of both parties. Freezing the accounts can be done by contacting the bank.
After the divorce, you and your spouse will be responsible for your own debt and the debts taken on in the divorce settlement. If collectors try to collect a joint debt that falls on your spouse in the divorce settlement, you may need to provide a copy of the divorce decree to stop collections and remove the debt from your credit report.
You may need a settlement agreement or divorce decree to separate finances completely.
Call Rosenblum Law Today
It is important not to continue using joint accounts when you are going through a divorce. Continuing to use joint accounts will muddy the financial waters during a divorce. Separating finances, including freezing accounts, should be done with your spouse when possible.
Having legal guidance and prioritizing proactive financial management during this time is vital. An attorney can represent you in negotiations with your spouse for equitable arrangements. The attorney can also file motions with the court for temporary orders while the divorce is being scheduled for trial.
Rosenblum Law divorce attorneys are experienced in dealing with joint accounts and separating finances when preparing to file for divorce. Contact us today for a free consultation.
Last updated: Oct 16, 2024
