During a marriage, the financial identity of both spouses may become comingled due to joint bank accounts, joint credit cards, co-mortgagees, and more. Protecting yourself or your clients from financial identity theft after a divorce should be a top priority.
6 Main Categories of Identity Theft (According to the Federal Trade Commission)
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Employment or Tax-Related Fraud (34%): The use of one’s Social Security number and other personal information to gain employment or file an income tax return.
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Credit Card Fraud (33%): The use of someone else’s credit card or opening a new credit line in someone else’s name.
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Phone or Utility Fraud (13%): The use of someone else’s personal information to open a wireless phone or utility account.
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Bank Fraud (12%): The use of someone else’s personal information to take over an existing financial account or open a new account.
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Loan or Lease Fraud (7%): The use of someone else’s personal information to obtain a loan or lease.
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Government Documents or Benefits Fraud (7%): The use of personal information to obtain government benefits.
Note: Percentages exceed 100% because some complaints involved more than one type of identity theft.
Common Identity Theft Issues Post-Divorce
Identity theft after a divorce is more common when most family credit was obtained in one spouse's name, leaving the other spouse struggling to rent or buy a new home, establish utilities, or get other credit. Even obtaining new cellular phone service may become an obstacle when there is little or bad credit in their name. The ease of obtaining these new services in the former spouse's name may be too tempting.
Spouses have significant access to each other’s personal information such as Social Security numbers, credit card numbers, and other critical details needed to establish new credit and future misuse. The effects of identity theft on your client’s current and future credit can be devastating and take significant time and effort to correct.
Steps to Avoid Financial Identity Theft After Divorce
Advise your divorcing clients to take the following steps to protect themselves from future financial identity theft:
1) Freeze Credit Files
If there is a concern about identity theft or someone gaining access to your credit report without permission, consider placing a credit freeze on your report. Also known as a security freeze, this free tool lets you restrict access to your credit report.
A security freeze does not stop you from opening new credit lines, buying a house, or applying for a job. However, if you plan on doing any of these, you'll need to temporarily lift the freeze, which you can do for a specific time or for a specific party such as a landlord or potential employer. It's free to lift the freeze and free to place it again when you are done accessing your credit.
2) Monitor Credit Regularly
Consumers can access their free credit report from each of the major credit bureaus annually. By checking your credit file with a different bureau every four months, you can monitor your credit for free throughout the year. For more diligent monitoring, consider using an identity theft protection company. Visit www.annualcreditreport.com for free access to credit reports.
Divorce is a stressful and emotional situation where even a normally responsible person might do things they otherwise would not. Taking necessary precautions to secure your divorcing client’s financial identity can save them a great deal of frustration and time in the future.
More Questions About Identity Theft Post-Divorce? Contact a CDLP® Near You!
It's important to have all the necessary information when going through a divorce, especially when the possibility of identity theft may arise. Always work with a Certified Divorce Lending Professional (CDLP) when dealing with divorce and real estate or mortgage financing. Find a CDLP® near you now!
This is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact an attorney or tax professional to obtain legal and tax advice. Interest rates and fees are estimates provided for informational purposes only and are subject to market changes. This is not a commitment to lend. Rates change daily - call for current quotations. The information contained in this newsletter has been prepared by, or purchased from, an independent third party and is distributed for consumer education purposes.
Copyright 2020 Divorce Lending Association. No portion of this post may be reproduced without the written consent of the Divorce Lending Association.
