Divorce Can Affect Your Credit Score, Says Denver Divorce Lawyer
Denver, CO (Law Firm Newswire) October 1, 2012 - While the process of divorce may not have a direct effect on someone's credit score or credit history, personal credit may be affected.
According to Rob Berger at DoughRoller.net, the way individuals in a marriage manage their financial separating during a divorce will help determine if and how their credit rating changes once they are legally split. It pays to plan ahead in order to avoid costly long-term mistakes.
For example, even if just one spouse is ordered to pay off a debt, such as a jointly-held credit card, warns Berger, the collection agency can go after both names on that card. So the ex-partner's credit will be on the hook, if the co-holder does not meet payment schedules or otherwise defaults. Both spouses can end up with a lower credit score and negative items. This goes for mortgage loans and other bills as well.
"You get one free copy of your credit report every 12 months," says Denver divorce lawyer Bill Thode. "Be sure to comb through and check for errors and address them immediately."
Berger advises individuals to remove their names from joint accounts, if they are not obligated to pay, and sell any jointly-owned property on which money is still owed. If that is not possible for custody, or other reasons, he counsels that the non-resident co-owner keep a close eye on mortgage payments to ensure any issues are addressed in a timely fashion. Cars are easier, says Berger, and a simple refinancing can shift the car title to the name of the spouse who will retain it.
"Separate your credit standing and all financial issues from your former spouse," says Thode. "Close joint checking accounts. Sometimes it's best to just cancel previous accounts. Each person can get a new card and new account in their own name."
To prevent future credit report issues that may arise from a new spouse's payment issues, think about keeping separate accounts, including assets, credit and retirement accounts. Also consider hammering out prenuptial agreements that cover how financial issues will be divided, and draft wills that specify where assets will go, particularly if there are children from previous marriages.
Thode Law Firm, P.C.
201 Steele Street, Suite 201
Denver, CO 80206
Call: (303) 330-0425
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