Protecting credit after a divorce

On Behalf of | Apr 30, 2019 | Divorce

When people in Oklahoma decide to divorce, they are often aware that the financial effects of the separation will be significant. After all, major assets like the family home or retirement funds will need to be divided. However, the financial aspects of divorce can move beyond the direct effects of property division. Many people may not consider their credit as part of a divorce, but it can be a significant issue. If a spouse does not take action to protect their credit scores, they may witness serious damage during a divorce.

Of course, negative credit issues can affect a person’s ability to get a loan or obtain credit for many years to come. At the same time, getting a divorce does not, in and of itself, make a person’s credit worse. Marital status is not a factor in a credit score. However, other issues associated with the divorce can pose a serious problem. In the first place, the divorce decree that handles matters of asset division binds only the divorcing spouses, not their lenders. Therefore, if the decree includes a decision that one spouse is responsible for some types of joint credit payments, the original lender can still hold both former spouses responsible.

This is one reason why it is important to close or transfer all joint accounts along with the divorce rather than retaining them and relying on agreements to determine who will pay which bill. Otherwise, both former spouses could take a credit hit from only one person’s failure to pay outstanding debts.

There are a variety of financial issues that can accompany a divorce. However, planning in advance can help mitigate the potential negative effects. A divorce attorney can work to obtain a fair settlement for a client.