Don't let your ex trash your credit

Contact the creditor. Call to ask the creditor to make a note in your file that you've split with your spouse and explain how you want the account to be handled. If you're able to close the account, request that the creditor report to the credit bureaus that the account was closed at your request.

Make it clear that you will not be responsible for any further charges as of the day you call, Martin said. Take notes of your conversations, including times, dates and contact names, and write down any instructions the creditors give you for what to do next.

Follow up. As soon as possible after your telephone conversation, follow up with a letter recapping what you've told them. Ask them to send you written confirmation that they've taken the action you requested. Keep all this paperwork in case you run into problems later.

In a couple of months, order your credit reports again and review them to make sure the accounts have been properly handled. If an account is listed as open that should be closed, or if the reported balance on a frozen account has grown, contact the creditor again immediately.

Meanwhile, make sure the bills are getting paid. This is key. Divorce negotiations can take months, and all it takes is one late payment to hurt your credit. Make sure that doesn't happen, even if you have to make minimum payments on accounts that will ultimately be your spouse's responsibility.

If you're already divorced and your ex is falling behind on a joint debt, you may need to start sending in the payments yourself, or even pay the debt off entirely, to protect your credit. You may be able to recoup these payments from your ex; Martin recommends checking your divorce decree to see if it gives you any recourse in these situations. (This should be a standard feature, but if you had a bad lawyer or did it yourself, it might have been left out.)

That takes care of unsecured accounts. Secured loans -- those used to buy an asset such as a house or a car -- can be even trickier for joint borrowers. Failing to pay these loans on time can lead to foreclosure or repossession and can be a huge hit on both your credit reports.

You have three choices with secured loans:

• Sell the asset. This is the cleanest choice, since you can pay off the loan and divide any proceeds from the sale.

• Refinance the loan. This is the second-best choice if your ex has enough income and good credit to qualify for a loan in her own name -- or can convince a relative to co-sign the loan. Ideally, you would hold off making your divorce final until the refinancing was completed.

• Remain on the loan -- with conditions. Sometimes it's not possible to sell or refinance before divorce proceedings are finished. Perhaps your ex will continue to live in the family home with the kids, but can't qualify for a refinance on his own.

In this case, attorneys say, it's usually best to set some kind of time limit so that you're not on the hook forever. You might agree, for example, that when the kids are 18 the home will be sold if your ex still isn't able to refinance.

To further protect your credit, consider having the lender send the loan statements and payment coupons to you at your new address, or get Internet access to the account. That way you'll be able to see if your ex is falling behind and perhaps step in before both your credit ratings suffer.

The loan and the title

You also can encourage your ex to put the payments on automatic by having the lender deduct the monthly bill directly from his checking account. That will ensure the bill is paid on time each and every month.

But here's an important tip for secured loans: Don't allow your name to be taken off the title if your name is still on the loan. You don't want to be responsible for the debt if you no longer own the asset.

All this is stuff Joan wishes she had known before her divorce was final. Her ex's credit is too bad for him to get credit cards in his own name, so the debt can't be transferred off their joint cards. If she decides to pay the bill herself, she has little recourse against him, since he has no property for her to put a lien against. She would have been better off taking on the debts herself, she realizes now, and getting a bigger property settlement to offset the liability.

"You're always relying on his good behavior," Joan said. "If he's not responsible, you're in a no-win situation."

Liz Pulliam Weston's new book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life," is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

Updated Dec. 11, 2007

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