What Happens To Your Credit Following A Divorce?
From the moment you get married, you go from being one person to being two. From credit cards to loans to utility bills, everything you put in your name is also in your spouse's name. The question looming on many couples' minds is: what happens to all the debt in your and your soon-to-be ex's name after the divorce is finalized?
The Divorce Decree
A divorce decree will be issued by the courts. It is a final legal documentation that makes the cessation of your marriage official. The purpose of the decree, however, is to outline the responsibilities of both you and your ex-spouse following the divorce. Within the decree, all of the debts you accrued as a married couple will be divided equally between you and your ex. For example, the court may decide you are responsible for paying off a car loan while your ex is responsible for the mortgage.
It is important to understand a divorce decree will not divide any shared financial accounts you and your spouse had. This is a step you will need to take on your own.
Separate Your Shared Accounts
It is important for you to close and/or separate all of your shared accounts immediately. This includes bank accounts, credit cards, mortgages, and loans. If you do not take this step, the shared accounts will keep you financially tied to your ex-spouse. This can result in a problem if your ex-spouse is bitter about the divorce and decides to run up a credit card bill and not pay it off, as the bill would still be in your name, making you just as responsible for it.
Start Building Credit in Your Own Name
Depending on how long you have been married, you may not have much of an individual credit history. Unfortunately, lack of credit history can be just as bad as having bad credit. When you lack a credit history, financial institutions have no way of knowing whether or not you can be trusted to pay bills on time.
This is why it is it is vital for you to start building a good credit history in your name once the divorce is finalized and your debts have been separated. One easy step you can take is apply for a credit card and use that credit card to make some routine payments each month. Then, you should pay the bill off in full each month.
It will take time, but both you and your credit history will survive having a divorce. The best thing you can do is not wait to get your finances in order once the marriage has been terminated. For more advice, check out websites like http://madisonlf.com.