October is National Domestic Violence awareness month, yet we don’t often consider what happens with financial abuse. Yet it’s real, and we commonly see it at Modern Law.
Financial abuse occurs when one spouse restricts the access of the other spouse to the couple’s joint assets. It can also include hiding assets, draining assets when a victim is trying to leave, and restricting one spouse’s ability to use their own credit. Financial abuse occurs in 98 percent of abusive relationships, and it shows up as an effort by the controlling spouse who’s attempting to get the other from leaving. It can also show up as a manipulation to bring someone back into a relationship. Of the seven in eight women who go back to an abusive partner after leaving, a significant portion attributes the return to financial pressures.
An abuser can control the victim’s financial freedom in a number of ways, both before and after she attempts to leave.
Opportunities for financial abuse
An abuser often runs up debt on their credit cards or doesn’t make payments. If a victim has a joint account with the abuser, or they have signed her up for loans or credit cards without the other’s knowledge, a victim could see their credit score decimated by the abuser’s actions or even be held liable for the abuser’s debts by credit card companies. Abusers sometimes take out credit cards in their children’s names, with themselves as the co-signers, saddling their kids with ruined credit scores before they are financially independent.
After a victim tries to leave, the abuser may use their credit card statements—particularly if they share an account—to track their victims down. Most injuries or homicides related to domestic violence occur when a victim is leaving or has left the relationship and many batterers try to stalk their victims who manage to get away.
The effects of financial abuse
After a victim leaves a financially abusive relationship, they may find herself with severely limited resources. If the abuser ran up debt on a joint account, the victim’s credit score will be damaged, and they won’t be able to access or start new credit sources when leaving. The victim may even have trouble renting an apartment, getting a cell phone or landing a job. If an abuser knows the victim’s personal information —such as their social security number or mother’s maiden name—they can track any inquiries into the victim’s credit score, and find the victim’s location.
Even if a judge rules that the abuser should pay for the debt they’ve incurred, debt collection agencies may come after the victim for a delinquent charge. That leaves the victim liable for all the debt in a joint account, whether or not they are responsible for running it up.
Protect yourself before and after leaving
There are steps that a victim can take If it’s safe to do so, transfer your assets—paychecks, inheritance, spare change—into a separate bank account before leaving. Make inquiries as to where your household’s assets are, and how much debt you have.
Keep an electronic copy of all your important papers, including bank statements, social security numbers, birth and marriage certificates and documentation of jointly held assets on an online secure folder that only you can access. You may also need a physical copy of some documents like a deed, or passport, at a location away from the house. As soon as you leave, change all your PIN’s to codes that are not easily identifiable, avoiding obvious things like children’s birthdays. Call the issuers of any joint accounts and have your name removed. It will not protect you from existing debt, but it will insulate you from having to pay for anything incurred after you leave.
Once you are ready to leave, withdraw half of the assets from any joint account. This is a step many victims don’t feel comfortable doing, thinking it may be unfair, but in an abusive relationship it’s important for the victim to have a path to a successful single life.
We’ve seen several clients accumulate money outside of a bank account, before leaving, by buying small gift cards as part of their regular shopping. It may take some planning, but if a spouse is abusive and watching spending scrupulously, it’s been one way for the victim to hide away cash over time. You can also buy prepaid cards at a CVS or Walmart and load up the balance with as much money as you want for a small (usually $5 or less) fee. While it doesn’t earn interest, it is perfectly anonymous.
Getting back on your feet
If you are on the hook for your spouse’s debts, send a copy of any court orders to the credit company explaining your situation. Also, send a letter to credit reporting agencies. Such extenuating circumstances may help you qualify for a credit card.
There are many things you can do to rehabilitate your credit score. You may have to settle for a credit card with a high APR until enough time has passed, or get one with a very low credit ceiling. In order to grow your credit score, it’s important to make payments on the card to pay down the debt in addition to when the payment is due. Making twice a month smaller payments rather than one when the payment is due, signals the credit agency that you’re a responsible party. If you have assets stashed away, you can post collateral for a secured credit card, which extends you as much credit as the amount you’ve posted. Secured credit cards, unlike prepaid debit cards, also help to raise your credit score.
Getting by on cash alone is extremely difficult when you’re in a rebuilding phase. Everything from online purchases to gas is geared towards paying by plastic. If it is safe, you can get a checking account and a secured credit card. However, if you believe you are in danger if you use your social security number or trigger a credit inquiry, get a one-time-use prepaid debit card to get by.
The National Endowment for Financial Education (NEFE) has a webinar series for survivors of domestic violence, including information about rebuilding financially after domestic violence, achieving financial stability, housing options and more.