Strike Back and Move On: How to Recover From Financial Abuse

Financial abuse is serious. And where there's financial abuse, there's almost always domestic violence, fear, and trauma. California's Department of Financial Protection and Innovation says lack of access to money often forces victims to stay with abusive partners for longer, and experience greater danger. For many partners, economic abuse can continue after separation, leaving them with debt and shame, doubting their ability to manage their own financial future. 

If you've removed yourself from an abusive situation, you made a brave decision. What happened to you was not your fault. You deserve a fear-free, stable future. And once your physical safety is addressed, it's time to rebuild your financial well-being. 

What Is Financial Abuse?

Financial abuse can be less obvious than emotional or physical abuse. Financial abuse can include someone:

• Taking your money or stealing from you

• Sabotaging your job by disrupting you constantly or making you miss work

• Preventing you from choosing your own career or from working at all

• Denying necessities like shelter, medication, clothes, and food

• Withholding credit cards or using yours without permission

Financial control is one way many abusers gain the upper hand over their partners, and it can begin in ways that seem innocent or well-meaning. For instance, a wife being poorly treated at work may come home to a sympathetic husband who urges her to quit and follow her dreams. Or her husband may want to take over the finances so they can “have more family time.” A financially savvy partner may convince the other to relinquish control of or access to joint money. 

But what happens next may be anything but loving. You may have to get permission to buy groceries or get a haircut. You may be put on an allowance like a child. Your ride-share app or your mobile phone may be attached to your partner's credit card as part of ensuring that they always know where you are. And financial abuse can continue after you leave if you haven't wrested access to your money from your abuser. 

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Immediate Safety Steps

Access the National Domestic Violence Hotline online via call, chat, or text (the site cautions you to delete your browsing history, and make sure your internet usage isn't tracked). They can help you understand your options and plan your next steps. If your partner comes home or walks in while you’re speaking with an advocate, you should immediately disconnect the call.

Your plan to get away should include these steps:

1. Identify safe people and places. Choose trusted friends or family members you can reach out to. Agree on a secret code word to signal you're in danger. Pick a safe location where they can pick you up.

2: Stay connected safely. If it’s safe to do so, keep a separate phone (such as a prepaid one). Memorize important phone numbers so you can call for help even if your partner takes your phone.

3: Prepare to leave quickly. Make a list of essential items such as ID, money, and important documents. Keep these items in a safe place. Hide an extra set of car keys.

4: Get help and collect evidence. Ask your doctor about getting extra medication or medical devices. Contact local courts for information on restraining orders. Gather evidence of abuse, like threatening messages or photos of injuries. Keep copies of important documents on an external drive. 

5: Stay safe online. Use a public computer or a friend's device to gather information. Be cautious about your online activities to avoid being tracked.

If you or your children are in immediate danger, don’t hesitate to call 911. 

Financial Recovery

Sometimes, financial abuse includes identity theft. It's not uncommon for abusers to take out credit in their victim's name, then not make the required payments. So part of recovery involves checking your credit, separating your finances, and, if necessary, building or rebuilding your credit. You may also be overwhelmed with debt you can't afford to repay.

How to Check Your Credit Reports

There are many ways to check your credit reports and get your scores for free, and it's a good idea to review your file with every major agency: Equifax, Experian, and TransUnion. You may be able to get one or more scores from your bank or credit card issuer for free. And you can use the government-authorized site, annualcreditreport.com, to order reports from all three bureaus.

Go through your reports and look for accounts that you didn’t open, charges on your credit cards that you didn’t authorize, and collections or other derogatory items not caused by you. Finally, look for financial ties to your abuser, such as joint debts or authorized user accounts. 

If someone has used your credit or accounts without your consent, contact those lenders directly and discuss the circumstances with them. This may mean talking through transactions you didn't make. Cancel accounts and/or remove additional cardholders.

If your abuser has damaged your credit, you may be able to challenge debts that aren't yours and undo some of the damage. You can dispute your credit report with each credit bureau online in just a few minutes.

Separating Your Finances

It's not enough to put physical distance between you and your abuser. You'll have to separate your financial life as well. 

Protect your credit

Consider putting a fraud alert or freeze on your credit report with all three reporting agencies. Your abuser probably has all the information needed to apply for credit in your name, so this step is key to avoiding future damage. You can also dispute every account or charge that you didn’t authorize, and add notes to your file explaining what happened for future creditors to see. Finally, contact all your credit card issuers and request a new card with a different number. 

Secure your savings

Open new savings and checking accounts that your ex-partner won't have access to or knowledge of. You may want to switch banks for extra safety. Close your old individual accounts as well as joint accounts with your ex. Paperless statements can help safeguard the location of your new accounts. 

Get professional help

If there are substantial assets involved, a law firm can help you fight to keep what's yours. Restraining orders can prevent either partner from selling assets, closing accounts, or making major financial changes during divorce proceedings. If you believe assets are being hidden, a forensic accountant can help you ferret them out. If you don't feel safe, insist that negotiations go through your attorney. You may be able to sue your former partner for financial damages (but that's a question for your lawyer). 

Rebuilding

Building or rebuilding credit after financial abuse takes time. Here are a few steps that can help. 

Build credit with a starter credit card

If you have a stable income, you can apply for an unsecured credit card (a credit card that doesn't require a deposit). Several issuers offer starter credit cards with no annual fee that you can qualify for even if you haven't built credit yet.

Use the card to cover a few small purchases each month, then pay the balance in full each month by the due date. After six months, you should have the start of a good credit history.

Gain credit history as an authorized user

If you have a trusted friend or relative with a strong credit history, you may be able to borrow that good credit to boost your own by becoming an authorized user on their credit card.

Many credit card issuers report a card's payment history and utilization to the credit bureaus for the primary user and authorized users. If you have no or very limited credit history, adding an established account with a long history can improve your credit score.

The downside is that if the primary cardholder misses a payment or overspends, it could impact your credit score, too. Similarly, if you use your account access to overspend, you and your friend could both wind up with a ding on your credit history (and potential relationship conflict as well).

Get a secured credit card

A secured credit card can be an excellent option if you have at least $200 to use as a security deposit. That deposit secures your credit line, lowering the risk for the card issuer. This makes secured credit cards much easier to get than unsecured cards.

When comparing your options, look for a secured credit card that:

• Has no annual fee. You shouldn't need to pay a fee for a decent secured credit card.

• Reports your payment history to all three credit bureaus. Most major banks do this for every card, but ask to be sure.

• Offers a grace period on interest fees. Most credit cards don’t charge you interest if you pay your balance in full by your due date.

A number of great secured credit cards also offer extras, like cash back rewards on purchases. Just don't let the prospect of rewards tempt you into overspending. Only charge what you can afford to pay off that month. Pay your credit card in full by or before your due date every month. Keep this up, and you should see positive changes to your credit scores after about six months.

Use a credit-builder loan

Unlike traditional personal loans, credit-builder loans are specifically designed to help you build a positive payment history. (Though credit-builder loans aren’t available in every state.) Instead of getting money upfront and repaying it, you make regular monthly payments to the loan company according to your agreement, and get money back afterward.

Your payments are reported to the credit bureaus. Once you've made all your payments, you get your money back, minus any agreed-upon fees. Sometimes the lender disburses the money to you in installments as you pay down the balance.

Credit-builder loans could help you build credit, and help you get into the habit of setting aside money each month. Keep saving after you've completed the credit-builder loan, and you could accumulate a nice emergency fund.

Apply with a cosigner

The idea behind credit checks is that the lender wants to know it'll get its money back. If your credit history isn't reassuring to a lender, you could have better luck applying for credit with a cosigner.

Choose a trusted friend or family member with a well-established credit history and good credit scores. It also helps if they don't have a lot of pre-existing debt.

Make sure you have a repayment plan you're certain you can manage. Cosigners are equally responsible for cosigned debt. If you default on the loan, your cosigner could get sued, damaging both people’s credit.

Dealing with Coerced Debt and Fraud

Coerced debt means debt that a victim of abuse takes on unwillingly due to their partner's use of threats, manipulation, or physical force. To coerce you into debt, the abuser may have: 

• Forced you, threatened you, or made you feel too scared to refuse the debt

• Tricked you into taking on the debt 

• Taken on the debt in your name without your knowing about it

• Stolen your money, forcing you to borrow for essentials

Coerced debt can be very difficult to prove, especially if you applied for and signed for borrowed funds. It can be hard to obtain a police report, and credit-reporting agencies are resistant to deleting coerced accounts. 

Similarly, it can be difficult to prove fraud when accounts are opened by someone who has access to your personal information, or charges are made by someone who has your PINs and  passwords. Consider contacting a money advisor, lawyer, or nonprofit credit counselor for help. Ask the creditors to validate any debt you don't recognize. If they can't prove it's yours, it isn't yours. 

Document the abuse

Examples of useful documentation include:

• Letters from a domestic violence shelter, victim's advocate, healthcare and/or mental healthcare provider about the circumstances of abuse

• Legal filings like a restraining order, criminal proceeding, divorce decree, separation agreement or other court order

• Police reports. You can request one after the fact, and some creditors may require it to help you.

Contact creditors about writing off the debt

Explain your problem, and provide as much proof as you can concerning how the debt was incurred and your inability to afford it. Be very careful about the information you provide to creditors or debt collectors, especially if you don't want your ex to know where you are. Your abuser may get notice of actions you take on joint accounts, and collectors might contact your abuser to verify your contact information. You shouldn’t have to pay if you don't owe.

Financial abuse can put you in a bad position, unable to afford even legitimate debt that you chose to incur. Bankruptcy, debt settlement programs, and debt management plans are possible solutions, and an experienced professional can take some of the debt stress off your shoulders while you put your abuser behind you. 

People just like you are seeking debt relief in Colorado Springs, CO and across the country. The first step is the most important one—explore your options.

If your ex incurred debt by applying for credit without your knowledge or permission, download a complete recovery plan at identitytheft.gov. 

Tips to Manage Your Finances While You Build Credit

There's a roadmap to recovering from financial abuse, and it's a little different from getting past most setbacks. First, connect with victim support services, financial counselors, and legal advisors. Use whatever help you're entitled to. As uncomfortable as it may be to think of yourself as a victim, you have, unfortunately, been victimized—creditors and debt collectors may need to be reminded of that. 

If your income is limited, prioritize your safety, then covering basic necessities, then saving an emergency fund. Work with your advisors to determine what to do about any claims from creditors—negotiate the debt, pay it, challenge it, and so on. The National Domestic Violence Hotline's local directory of providers can help you find resources such as temporary housing, financial aid, counseling, and more. 

Once you've seen to your personal safety and protected your income and your information, you can plan your recovery and tackle improving your credit profile. 

Automate your bills and payments

Paying your mortgage, rent, utilities, car loan, and other bills on time should improve your credit score. Since most creditors report debts that are 30 days past-due to the credit bureaus, pay your bills as soon as you can. 

Keeping track of a dozen due dates can be a lot, especially when you're rebuilding your life. Automate what you can using automatic payments for your bills, utilities, and credit payments. Just keep an eye on your bank accounts to make sure you don't overdraw by accident.

If you’re struggling to pay your bills, you may want to reduce your expenses and/or increase your income. It can be hard to know where to start, so consider these ideas:

Pick up a side gig. If you’re lucky enough to have a full-time job but could use some extra cash, a side gig may be worth it. Fortunately, options like delivering food and selling handmade items online are flexible, and you can make the gig work with the other demands of your life.

Downsize or relocate. You may be able to cut your housing costs significantly by downsizing your space or relocating somewhere more affordable.

Cut the extras. While cable, meals out, and a streaming service may help you feel good, they can lead to financial stress if you can’t truly afford them right now. Choose just one or two things that really bring you joy and save the rest for later in your financial recovery.

Make sure you have reliable income. A stable income stream that exceeds your bills is essential to building strong finances. It can also boost your self-esteem to have your own income. If you already have a good job that covers your bills, you're ahead of the game. Consider how you can grow your career and work on building your finances.

If you're in need of employment or looking for a second job, consider these suggestions:

Connect with a local nonprofit. The U.S. Department of Labor has a list of resources to help you find job assistance or apprenticeships, and sign up for unemployment benefits if you’re eligible.

Update your resume. A well-written, compelling resume is key to landing interviews. Even if you don’t have a lot of work history, recent volunteer work, for example, can help you market your skills and experience. There is free advice on resume-building available, or if you have the money, you can get professional help as well.

Consider more education. Taking a few courses at a community college or even going back to school part-time or full-time to earn a degree may be a good choice if you have limited work history or have been out of the workforce for a long time.

Create a budget (and stick to it). Building credit is largely based on paying your bills on time and reducing your debt. That’s where a budget comes in. A budget can help you take control of your financial situation. 

If you’ve never budgeted before, here are some budget methods you can try:

Line-item. With a line-item budget, you list out your expenses over a year. As you go through the year, compare current expenses to previous ones to ensure you’re on-track. If you use this technique, add a savings line item into your list of expenses so you remember to save.

Pay yourself first. Paying yourself first is a budget process that lets you allocate a certain percentage of your income toward your savings as soon as you get paid. Rather than focusing on tracking expenses, this budget makes saving money a priority. Don't use this method unless your income is more than your expenses.

Envelope. The envelope budget can help you stay on budget for cash expenses like groceries, gas, and other household expenditures. You keep specific amounts of cash in different envelopes, each assigned to a different expense. Once an envelope is empty, you’re done with spending in that category for the month. You can find digital budgeting apps that use a similar method if you'd rather not use cash.

Zero-sum. The zero-sum budget assigns a specific job in advance to each dollar of your monthly after-tax income. It forces you to think critically about what’s important to you, and how you want to spend your hard-earned cash.

Long-term Financial Recovery Plan

Your long-term plan involves setting goals and budgeting to meet them. 

• How much should you save for retirement?

• For other goals?

• Where can you scrimp, and where can you splurge?

You can work this out with the help of a financial planner, investment advisor, financial planning app for consumers, online budgeting calculator, accountant, or savvy friend. Plan to check in with yourself at least monthly to make sure you're on-track, and adjust if necessary. That's how you set yourself up for success. 

But you also want to safeguard your new life, money and information to avoid future abuse. Here are some tips for your future financial survival:

• Don't share an email account with a partner or spouse.

• Don’t share PINs or passwords. 

• Go paperless so no one in or out of your household has easy access to your statements. 

• Make sure your PINs and passwords are not easy for anyone to guess, including someone who knows you well. 

• Your online accounts should be tied to an email address unknown to your abuser. 

• Keep an emergency fund accessible, but in a place known only to you. 

• Review your credit report regularly. This can easily be part of your monthly budget checkup. 

Resources and Support Services

You don’t have to build credit and gain financial health on your own. Fortunately, there are a variety of resources that can help you get on your feet:

• The National Domestic Violence Hotline is a one-stop shop for addressing your personal safety and finding local resources to pick up the pieces. 

• IdentityTheft.gov is a comprehensive resource to deal with fraudulent or coerced debt. 

• Your state or county victim assistance programs can help you navigate communication with creditors and decide what to do.

• The Legal Aid page of USA.gov

• The National Foundation for Credit Counseling (NFCC) can put you in touch with a nonprofit credit counselor to help you sort out debt and credit problems after financial abuse. The National Network to End Domestic Violence offers a financial abuse toolkit on its site with useful information for survivors.

• Local food banks. If you’re having trouble putting food on the table, don’t hesitate to turn to a local food bank for help. You can find a food bank in your area through Feeding America’s search tool.

• Government assistance. Several federal benefit programs may support you after you’ve left an abusive situation. Look into the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and Medicaid.

• Professional debt relief. Possible debt solutions include negotiation and settlement, bankruptcy, and debt management. 

If you’re experiencing domestic violence, please seek help. It’s available 24/7. Visit the Domestic Violence Hotline website or call 1-800-799-SAFE (7233).