While being divorced does not directly affect one’s credit score, the resolution of financial disputes and obligations may lead to some credit issues if not handled properly. Especially for couples with complex assets and many joint financial obligations, it is important to make sure that bills continue to be paid on time and any lingering debts are addressed.
One major misconception that Minnesota residents have is the effect of a court order to pay off a certain debt on credit obligations. While a decree from a judge does bind the person to the obligation in court, it does not change the agreement between the parties and the creditor. This means that if a divorcing couple had a credit card together and the person that was ordered to pay off that debt does not do so, it could still negatively affect the credit of the other partner and lead to a collections action.
Experts advise immediately removing your name from a credit account that you are not obligated to pay under the divorce decree. This can avoid confusion and help preserve financial stability in a tumultuous time.
For couples who shared real estate, business interests, or investment accounts, this process can become more complex and difficult to sort out. It can also be hard to make any major moves, like refinancing a mortgage or selling stocks or other assets, without a final divorce agreement in place.
More information about complex asset divorce and asset distribution is available on our Minnesota family law website.
Source: MSN Money, “How divorce affects your credit,” Rob Berger, August 9, 2012.