How does Divorce Affect Credit
Your marriage is about to dissolve in the divorce court. This is a tremendously emotional time in the lives of both partners. Both will need to learn about how financial issues affect each partner. You may want legal advice to help you with these issues.
Finances should be worked out, if at all possible, before the divorce is completed. Credit reports for each partner need to be secured, examined and fixed so that both reports are accurate. When you examine your finances you will e able to see what credit issues need to be decided.
There are issues if you are responsible together for a mortgage. Home issues need to be carefully managed particularly if there is alimony and child support involved. You may decide to sell the home or to let one partner buy it. That would take care of that joint loan.
You will need to also arrange to have other debts such as cars, credit cards, utilities, etc. in one name only. These are decisions that will need to be made by both of you and are not always easy.
Please know that credit cards should be only in one name. If joint credit card debt is not changed to one responsible party before the divorce, it can occur that credit card companies will go to the party not responsible (according to the decree) for payment. The unpaid debit could go to "collection" and you could start getting those embarrassing phone calls from collectors regarding the payments for the ex-spouse. Poor credit of one affects credit of the other. Take care of this before the divorce.
Figure out all cash assets and how these will be divided. Do the split, close any joint checking and savings accounts and open accounts in individual names. No one can get to the other's money.
During this process, pay all debts even if you have to sell some things to do so. This way, you are each then responsible for your own individual debts. You want to have your own financial base when you leave the marriage.
Remember that even though the divorce decree spells out the person responsible for debts, this will not negate any joint financial responsibilities which can come back to haunt you if not settled prior to the final decree. Be proactive during the divorce process and get your financial status in order.
Finances should be worked out, if at all possible, before the divorce is completed. Credit reports for each partner need to be secured, examined and fixed so that both reports are accurate. When you examine your finances you will e able to see what credit issues need to be decided.
There are issues if you are responsible together for a mortgage. Home issues need to be carefully managed particularly if there is alimony and child support involved. You may decide to sell the home or to let one partner buy it. That would take care of that joint loan.
You will need to also arrange to have other debts such as cars, credit cards, utilities, etc. in one name only. These are decisions that will need to be made by both of you and are not always easy.
Please know that credit cards should be only in one name. If joint credit card debt is not changed to one responsible party before the divorce, it can occur that credit card companies will go to the party not responsible (according to the decree) for payment. The unpaid debit could go to "collection" and you could start getting those embarrassing phone calls from collectors regarding the payments for the ex-spouse. Poor credit of one affects credit of the other. Take care of this before the divorce.
Figure out all cash assets and how these will be divided. Do the split, close any joint checking and savings accounts and open accounts in individual names. No one can get to the other's money.
During this process, pay all debts even if you have to sell some things to do so. This way, you are each then responsible for your own individual debts. You want to have your own financial base when you leave the marriage.
Remember that even though the divorce decree spells out the person responsible for debts, this will not negate any joint financial responsibilities which can come back to haunt you if not settled prior to the final decree. Be proactive during the divorce process and get your financial status in order.
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posted by Credit Counseling at
11:42 AM
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