Divorce and Your Credit
Divorce is often a devastating blow not only to an individual’s credit score, but also to his or her financial situation in general. Disputes between spouses as to who should pay debts, a loss of household income due to a spouse moving out, and an inability to afford to pay bills that formerly were paid using two incomes all can contribute to problems with your credit score. Once the damage is done, the hits to your credit may take years to undo. Avoiding an adverse effect on your credit can be essential to protecting your financial future. Fortunately, there are some simple steps that can help safeguard your credit rating and ease your financial situation.
Joint Debt and Divorce
One of the most common issues that arises following a divorce is the payment of joint debts. The more debts that a formerly married couple shares, the more potential there is for complications that can adversely affect your credit to occur. Your divorce decree should specifically set forth the debts for which each spouse is responsible. However, if these are joint debts, the creditor could still hold you responsible for payment of the joint debt, even if your ex-spouse was supposed to pay it, and vice versa. If neither of you pay the debt, then it will have a negative impact on your credit rating, perhaps for a lengthy period of time, depending on the nature and extent of the debt in question.
For these reasons, it may be better to take on the joint debts yourself, so that you can ensure that they are paid as agreed. Another way to protect your credit from this issue is to require your ex-spouse to refinance the debt solely in his or her own name within a certain number of days following the divorce, which would relieve you of liability for the debt. This can be problematic in some situations, however, because the creditor is not required to allow the refinancing, and often will not permit it if your ex-spouse has no income and/or a low credit rating.
Monitor Your Credit
While you always should monitor your credit, divorce is a particularly good time to do so. First, you will want to make sure that your spouse hasn’t opened up any joint credit card accounts or taken out joint loans that you don’t know about. This can prevent you from being held financially responsible for these debts during your divorce. Plus, after the divorce, you will be able to see if your ex-spouse is making the payments on the joint debts for which he or she is responsible, and take action against your ex-spouse in the divorce court as needed. You should obtain copies of your credit reports from all three major credit reporting agencies, which you can access for free at AnnualCreditReport.com. You also can check two of your credit scores for free at credit.com, which are updated on a monthly basis. By simply keeping a closer eye on your credit report than normal, you may be able to prevent the collateral damage to your credit that often results from divorce.
Set Up a Time to Meet With Florida Divorce Attorney Vanessa L. Prieto
Protecting your credit in the midst of divorce proceeding may be the farthest thing from your mind, but it is an issue that will directly affect your finances in the future. With some legal advice and help, you may be able to avoid a negative impact on your credit while still working toward the resolution of your divorce proceedings in a way that is right for you. Call your Fort Lauderdale divorce lawyer at the office of Vanessa L. Prieto and schedule an appointment to learn about how we can help.