Divorce has a significant impact on many aspects of your life. Not only are you ending your relationship with your spouse, you will be changing where you live and how you spend your time.
However, it is important to remember that divorce also impacts your financial situation. This is because any assets, property and debt acquired during the marriage will be equitably distributed between you and your spouse as part of the divorce settlement.
How debt is handled during your divorce can affect your credit score. Read on to find out more about this and other helpful family law tips for residents in Dacula, GA.
DIVORCE AND YOUR CREDIT SCORE
Many people understand that physical property, like the home shared with a spouse, and financial assets, like cash in bank accounts, will be divided among spouses when they divorce.
What most people overlook is that debt is also apportioned to each spouse during a divorce. This can affect your credit score.
That’s because a divorce settlement is an agreement between you and
your spouse only.
Although the agreement is enforceable by the court, it is not binding on third parties such as creditors.
If your name remains on any mortgage loans or credit card accounts with your former spouse, banks and other lenders can still hold you liable for these debts.
As a result, these debts will remain on the credit reports lenders use to evaluate your creditworthiness. This could make it appear that you are carrying a higher debt load than you realize.
Additionally, if your ex-spouse does not follow through their debt obligations, lenders can attempt to collect payment from you.
Both of these scenarios could negatively affect your credit score and prevent you from obtaining new car loan, home loan or rent an apartment. Credit scores can also affect your insurance rate and employment opportunities.
WHAT CAN I DO TO PROTECT MY CREDIT SCORE DURING MY DIVORCE?
There are some steps you can take to protect your credit score during the divorce process.
First, make sure you continue to pay all of your household bills on time because late payments lower your credit score.
Secondly, establish new credit card accounts in your own name. This will build your independent credit profile.
Finally, close any joint credit card accounts. This will lessen your vulnerability to nonpayment by your former spouse that can negatively affect your credit score.
Oxendine & Sauls’ team of experienced family law attorneys can effectively guide you through the divorce process and make sure your interests are represented.