A concern that often arises in divorce is whether or not one’s credit score will be affected. Divorce can affect your credit and your ex-partner’s credit in different ways:
- Changes in income: Two-income families face an adjustment after divorce, affecting their ability to make timely payments. When income is redirected to pay alimony and child support, the payor has fewer disposable funds.
- Creditors do not honor divorce decrees: Your divorce decree will specify the terms of debt responsibility and community property distributions, but creditors are not obliged to follow those.
- Joint debt: When spouses have joint accounts, that information remains on credit reports. So, when one defaults on mortgages, credit cards, and other loans, the other gets impacted. If you are not careful, your ex could be adding more debt without your knowledge.
- Close joint accounts: Your credit utilization ratio might increase after closing joint credit cards. That might mean you have less available credit going forward.
How Can I Protect My Credit Score?
There are ways to protect your credit score during a divorce, but it is important to work with a lawyer and act quickly. That way, you can be proactive and prevent future credit problems.
Listing all your debt and designing a plan to pay everything off is beneficial. Try to work on this with your spouse early on; if they are not cooperative, you must determine this on your own. Close all joint debt accounts right away once they have been settled.
Your attorney can petition the court if your spouse works against this goal. They may be able to freeze the accounts until things get worked out temporarily; you can put a hold on your credit that prevents anyone else from taking out more debt in your name.
How Can I Settle My Debt?
Your divorce lawyer will work to establish an equitable way to pay off your joint debt. They can act as your liaison, negotiating a fair agreement with your spouse. Sometimes, one spouse assumes responsibility for the debt in exchange for something like ownership of another property.
Having the spouse refinance the debt and put it entirely in their name is important. That way, the creditors should stop calling. Throughout this process, protect your credit score by remaining vigilant during and after the divorce. That way, you will notice any problems that might lower your number. Remember, whenever your name is connected with a loan, it will affect your score – even if your spouse was the one who drove up the debt.
Our West Chester Divorce Lawyers at Eckell Sparks Will Protect Your Rights and Best interests
Maintaining a good credit score is crucial after a divorce to help you get a loan, find lower interest rates on credit cards, rent an apartment, and even get a better job. Our West Chester divorce lawyers at Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. offer confidential consultations and can work towards your financial freedom. Call 610-565-3701 or complete our online form to learn more. Located in Media and West Chester, Pennsylvania, we serve clients in Delaware County, Chester County, and Montgomery County.