What happens during the course of a divorce can have impacts on many things, including one’s credit rating. Given how big of an effect one’s credit rating can have on one’s post-divorce financial life, paying proper attention to the issue of credit during a divorce can be very important. There are several things that divorcing individuals can do to try to protect their credit during a divorce.
One is to check their credit report when going into a divorce. This can give a person a good idea of where they stand credit-wise and what sorts of joint debt, joint lines of credit and joint accounts were obtained during the course of the marriage.
Another is to properly address joint lines of credit and joint accounts that are in existence regarding a person and their soon-to-be ex-spouse. This can include getting joint lines of credit paid off and closing joint accounts or getting them transferred solely to the ownership of just one of the parties. Failure to properly address such accounts and lines of credit could lead to a situation in which one or both divorcing parties’ credit is damaged.
Yet another step is to have open communication with one’s soon-to-be ex-spouse about credit and debt issues. While such communication can be difficult at times, it can be invaluable in spotting potential debt/credit issues before they become problems.
Another is to pay proper attention to joint debt when in negotiations regarding financial matters in a divorce. How debt is divided in a divorce has the potential to have long-term credit impacts on both of the parties to a divorce. Another important thing to remember when it comes to division of debt in a divorce is that, when an agreement is reached regarding how debt is to be divided, it can be very important to inform the lenders of the debt in question of the terms of the agreement. Divorcing individuals who have any questions regarding division of debt in a divorce should consider meeting with a family law attorney to discuss the matter.
Source: The Huffington Post, “‘Conscious Uncoupling’ Your Credit,” Jeanne Kelly, May 6, 2014