How Will Divorce Affect My Credit?

August 10, 2009 | Divorce, Family Law News, Legal Perspective

Icon for author Brian Vertz Brian Vertz

An article was posted recently on on the subject of joint debts in divorce. It is one of the most frequently-asked questions: “How will divorce affect my credit?” The divorce court may allocate responsibility for joint debts as part of the equitable distribution process, but the creditors may hold either or both parties responsible for the joint debts. For this reason, the credit ratings of both ex-spouses may be affected, as explains:

While the court is certainly an ultimate authority, it does not, in most cases, order the lender to recognize its decisions to assign payment responsibilities. [If, for instance,] the court says that your ex-husband has to pay the Visa bill, the lender can come after you if he doesn’t. And any negative record of missing payments will show up on your credit reports just as if you two were still together.

You can complain about it until you’re blue in the face, but your lender isn’t doing anything improper by attempting to collect the debt from both spouses (if the account is held jointly). And they certainly are well within their rights to report the account to your and your ex-spouse’s creditors as being past due. And the worst news of all: Your credit scores will suffer the same way they would have suffered if the debts were not paid while you were still married.

Paying off the joint debts is one solution, but not everyone can afford to do that. If the divorce is resolved by settlement, the settlement agreement may contain an indemnification clause. Your divorce lawyer can suggest other remedies as well.

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