Separating or getting divorced? 6 things you need to know to prevent spiralling into bad credit: Tip 3

What can you do during this difficult time to protect your credit file and avoid getting a bad credit history? Over the next month Fair Go Finance will expose many pitfalls and provide 6 helpful tips to help those entering this difficult time. You may have sorted the mortgage/rent and the credit cards but your relationship has probably also created joint bills, store cards and possibly some personal loans. For our third tip we look at what you should do about these in order to keep protecting your precious credit file.

Tip Three to avoid spiralling into Bad Credit: Phone Bills, Water Bills, Electricity Bills, Store Cards, Personal Loans  – They still need to be paid!

Your relationship may suddenly be over, but the bills are still coming. You can save your bickering for determining who gets furniture, photo’s and the beloved joint pet but you must accept joint responsibility to pay all outstanding bills. As with most service providers a good indication of who is legally responsible for the payments is by looking at whom the statements/bills are addressed to. Generally who ever the mail is addressed to is the legally responsible person for that debt. That said, you should always confirm this by phoning the provider and at the same time advise them of your separation and discuss whether the account needs to be closed/restructured. Logic should prevail for payment of each of these items. If you were both in the home when the electricity bill was issued, then both should share the payment. IF YOU DON’T: Like all the examples before, your credit report will become marred by default listings, and bad credit. The more you have, the harder it will become for any future credit/loan applications. Do not be fooled thinking that just because the payment due is not a large amount, that it will not affect your credit report. Any amounts over $100 will be listed and most lenders will look upon this as unacceptable – if they think you can’t afford an account of $100 why on earth would they want to risk lending you any money at all? Our fourth tip for next time will require some extra work from you. It will, however, be worth every minute if it means you can separate without any damage to your own credit report.

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It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.

Check your options before you borrow:
For more information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor.

Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan.
If you are on government benefits, ask if you can receive an advance from Centrelink.

The Australian Government’s MoneySmart Website shows you how small amount loans work and suggests other options that may help you.

* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.