Divorce and Debt
During the divorce process you will be dividing not only your assets but your
debts. This does not come without risk and must be done thoughtfully and
with great care. Furthermore, since your future financial well being may
be dependent on your creditworthiness, you will need to take positive steps
toward establishing or maintaining a solid credit history.
Make sure that you can afford your settlement. Leaving your marriage
asset-rich and cash-poor can be a formula for disaster. Assuming more debt
than you can afford to maintain can be dangerous as well.
Serious problems can occur if you and your ex-spouse remain financially linked
after your divorce. If you have joint credit cards, the payment history
relating to those cards will appear on both your and your spouse’s credit
histories. If your ex-spouse agrees to take responsibility for any debts
associated with those cards, there are still risks to you – even if the cards
are canceled as part of the divorce process. If your ex-spouse makes
untimely payments or otherwise defaults on the debt, these problems could haunt
you for a long period of time. Despite your divorce agreement, if your
ex-spouse declares bankruptcy, creditors will hold you responsible for any joint
debt. Furthermore, until such debt is fully paid, derogatory information
will continue to accrue and damage your credit, making future borrowing
difficult. Although not always possible, it is in your best interests to
pay off any joint debts and close all joint accounts prior to the division of
You should obtain
a copy of your credit history and review it for accuracy. Reporting agencies
should be notified of any errors so that they can correct them. If you
have not yet established credit in your name or your credit report has little
or no information on it, you should try to establish credit as soon as possible.
While it is usually best to do this while married, this is often overlooked.
Still, if you find it difficult to obtain credit, it would probably be better
to obtain a secured credit card than have none at all. To obtain a credit
report, apply for a credit card or obtain assistance in managing your debt.
More articles on credit and debt management:
Credit Card Stats
Improve Your Financial Health
Thinking of Bankruptcy
Applying for a Loan? Start by Ordering Your Credit Report
Reasons to Check Your Credit Report Regularly
information on the financial issues in divorce:
The Financial Guide to Divorce Settlement
by Carol Ann Wilson
Divorce and Money
by Violet Woodhouse and Dale
Ernst & Young's Personal Financial Planning Guide: Take Control
of Your Future and Unlock the Door to Financial Security, 2nd Edition
by Robert J. Garner (Editor), et. al.
DivorceInteractive.com tries to provide
quality information, but cannot guarantee the accuracy, completeness or adequacy
of the information, opinions or other content posted on the site. It is not
intended as a substitute for and should not be relied upon as legal, financial,
accounting, tax, medical or other professional advice. It should not be
construed as establishing a professional-client or professional-patient
relationship. The applicability of legal principles is subject to amendment by
the legislature, interpretation by the courts and different application by
different judges and may differ substantially in individual situations or
different states. Before acting on what you have read, it is important to obtain
appropriate professional advice about your particular situation and facts.
Access to and use of DivorceInteractive.com is subject to additional
Terms and Conditions. DivorceInteractive.com
is a secure site and respects your Privacy.
Advertise With Us |
Professional & Resource Directory
Divorce News | Glossary | Divorce Discussion Forums
DivorceInteractive.com All Rights Reserved.