April 4, 2017 | Share
Does Getting Divorced Affect Your Credit?
Getting divorced can impact your life in several ways, but directly affecting your credit is not one of them. The banks and credit rating agencies do not consider marital status when determining your creditworthiness. So, your credit status did not change when you got married, and it will not change when you get divorced.
But, due to the financial factors inherent in most divorces (such as division of debts and payment or receipt of financial support), getting divorced can indirectly affect your credit if you do not plan ahead and take appropriate steps to protect your finances. Here are three credit-related issues to consider when preparing for your divorce:
Credit Considerations for Your Divorce
1. Post-Divorce Liability for Joint Debts
Along with the division of your marital assets, you and your spouse will also need to distribute your joint debts. However, while you and your spouse can agree to virtually any arrangement that works for both of you (subject to certain legal limitations), the terms of your marital settlement agreement will not affect your joint creditors’ rights. In other words, even if your spouse agrees to take on sole responsibility for a joint debt (such as your mortgage, credit card debt or a car loan), you will still be financially liable if he or she does not pay.
There are a number of ways to address this issue, from using marital assets to pay off joint debts to refinancing in one spouse’s name. For example, if your spouse is keeping the family home, it may make sense for him or her to take on sole responsibility for the mortgage. The key is to find a solution that you, your spouse and your joint creditors all find satisfactory – and that will be enforceable in the Texas courts.
2. Ex-Spouse Access to Personal Accounts
If you will take sole control of a joint bank account after your divorce (or if your spouse knows your login information for an account that qualifies as separate property), it will be important to ensure that your ex-spouse is unable to access the account. You should complete any necessary paperwork with the bank as part of the divorce process, and be sure to change your online account information once your spouse is no longer entitled to access the funds. The same goes for investment accounts and retirement plans, and you may need to change your accounts’ beneficiary designations as well.
3. Budgeting for Alimony and Child Support
Finally, if you will be paying alimony or child support after your divorce, you will need to budget accordingly. Financial support obligations can only be modified under limited circumstances, and failing to pay alimony or child support can have harsh consequences. When going through the divorce process, it will be important to work with your professional advisors to ensure that you can meet all of your financial obligations once your divorce is final.
Contact the McKinney Divorce Lawyers at Nordhaus Walpole PLLC
Are you contemplating a divorce? Do you live in the McKinney, TX area? If so, contact Nordhaus Walpole PLLC for a complimentary initial consultation. To speak with one of our experienced divorce lawyers in confidence, call (214) 726-1450 or request an appointment online today.
Categories: Family Law & Divorce