Maintaining a good credit rating while going through divorce can be very tricky.

Even if two people who are separating can agree on how assets and liabilities (like that mortgage) are supposed to be split, that does not mean that your creditors are bound to those terms. In fact, whatever deal you work out with your former spouse (or a soon-to-be ex-spouse) has no bearing whatsoever on your legal responsibility to repay debts for which you were both co-signers.

In a nutshell, this means that if the two of you co-signed for credit cards, your house, a car note, or anything else, then your creditors can still legally come after either one of you for repayment.

How to Protect Yourself
When a home is involved in a divorce proceeding, and both individuals are on the mortgage, the single best way to protect the credit rating of both parties is to sell the home. This way, the bank gets paid off and your joint obligation is satisfied. Of course, the two of you will have to decide how to split the proceeds from the sale of the house – another potentially thorny issue. But it's far less dicey than sweating it out month after month, and keeping your fingers crossed hoping your ex will pay the mortgage as agreed.

I realize, of course, that for a host of reasons, some people may not want to sell a home, even if they are divorcing. Maybe the house still has sentimental value, to one or both parties. Perhaps kids are involved and you want to keep the house to provide stability to the children. Or maybe you're reluctant to sell simply because it's a rotten housing market in your local neighborhood. Whatever the case, selling may not be practical or feasible. If it isn't, consider two other options.

Let Your Ex Refinance the House ASAP

If a sale is out of the question, one party can attempt to refinance the mortgage and put it in his or her own name. The party assuming full responsibility for the house will have to qualify for a new loan on their own, showing their income, debts, etc.

Without refinancing the home, the longer it takes to get a divorce decree, the more potential exposure you have in terms of protecting your credit rating. Conversely, the sooner you can get that divorce decree, the less risk you face that your credit could be ruined by an ex spouse who doesn't pay the bills as agreed.


Tighten Up That Property Settlement Agreement

As stated, your divorce agreement – even after it's signed off by a judge – doesn't have the legal right to change the terms of your original mortgage agreement. Those terms and repayment stipulations were locked in when you both signed for the home loan. What you can do, however, is include in your divorce agreement (sometimes called a Property Settlement Agreement, or PSA) a strongly-worded paragraph that addresses several aspects concerning the house.

First, your PSA should note who will be assuming full ownership of and liability for the home. Next, the PSA should state a certain effective date that this party will be solely responsible for the house – including the mortgage, property taxes, maintenance on it, etc.

Additionally, include a clause indicating that until the divorce is finalized, the mortgage company is to also give the other party a copy of the monthly statements. That way the person who moves out of the house can still keep an eye on things and bring up the issue early on if the person living in the home doesn't pay.

Consequences of Non-Payment

Lastly, the PSA should note financial penalties and consequences that are imposed in the event of non-payment. For example, for every missed payment – or every payment that's 30 days late – your ex might be forced to make a certain cash payment to you. Moreover, you could insert a phrase stating that failure to pay the mortgage effectively amounts to a judgment in your favor against your former spouse.

This way, if it turns out that you ever have to pay the mortgage company to preserve your credit rating, you can take your ex to small claims court, or use that judgment against him/her to garnish his wages and seek other legal remedies. A good attorney will be able to help you word this appropriately in your Property Settlement Agreement, and advise you about your state laws.

Why Your Separation Date Is Critical

One final bit of advice when one of you will be moving out of the home in the future. Be sure to consult an attorney in your area for insights into two areas that may be impacted by a planned move. First, if you have kids, and you want to keep custody (or even have joint custody), find out whether or not moving would in any way jeopardize your ability to retain custody.

Additionally, understand how your state looks at your "Separation Date." Is it the date divorced papers were filed, the date you moved out of the house, or simply the date that you formally told your spouse that you wanted a divorce? Different states count your separation date in different ways. But this date is a vital legal benchmark.

This date is crucial because it can determine a host of financial aspects, such as your credit, alimony, pension benefits, the date at which the market value of the home is assessed, and so on. In general, most states won't hold you responsible for debts your ex-spouse incurred after your separation date. But debts amassed before then are often considered owed by both parties.

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Lynnette Khalfani-Cox, an award-winning financial news journalist and former Wall Street Journal reporter for CNBC, has also been featured in top newspapers including the Washington Post, USA Today, and the New York Times, as well as magazines ranging from Essence and Redbook to Black Enterprise and Smart Money. Check out her New York Times bestseller, 'Zero Debt: The Ultimate Guide to Financial Freedom.'