Going through a divorce can have a negative impact on your finances. You probably already realize that all of your assets, including your bank accounts, are likely going to be divided. What you might not realize is that your debts have to be divided too. This can affect your finances in more than one way. On top of having to cover some of the debts with your new single income, your credit might take a hit.
Your credit can be affected by divorce in a few different ways. When you and your ex decide to divorce, you should immediately close out all joint credit accounts. This protects you from having to pay for charges your ex makes after the divorce is filed.
In some cases, you might have to transfer debts to individual accounts. This isn’t always easy because creditors don’t have to provide this option to you. The creditors might refuse to do this based on the lower income that you and your ex each have because of the divorce.
When you are diving the property from the divorce, the debts are divided. The creditors don’t necessarily have to go along with the court order because the case was a civil matter in which the creditors didn’t have a part. They can still demand money from you and report late payments to your credit report if your ex doesn’t pay.
As unpleasant as all of this is to think about, you should work now to make plans regarding what you will do if your ex doesn’t pay the bills and you are stuck having to decide what to do. In some cases, the choices might come down to taking the hit to your credit or paying the bill yourself.
Source: FindLaw, “Credit and Divorce,” accessed April 07, 2017