Divorce And Its Impact On Credit
When a New Jersey couple gets a divorce, the parties must learn to survive on their own again both emotionally and financially. A divorced individual who wants to obtain credit cards or obtain a home or auto loan must be able to do so on his or her own. If a lender runs a credit check on an individual, any joint debt from the marriage may impact the chances of getting credit.
Although the divorce decree will often stipulate who pays which debts that were incurred during the marriage, a lender will still consider any joint debt as an outstanding liability for both parties. If the debt is not paid off according to the decree, creditors may still come after either party to collect the debt. This could impact the credit score and history of either spouse whose name was on that loan.
Accounts in which the other spouse was an authorized user should be converted to individual accounts whenever possible. This mitigates the risk that the other spouse could run up a bill that the cardholder would have to pay or risk damaging his or her credit. After the divorce is finalized, all accounts should be restructured as individual accounts to ensure that no one else has the ability to make charges.
Those who are going through a divorce should keep in mind that there are many financial implications that are involved. In some cases, one of the parties may be ordered to pay spousal support for a specified duration. The property division order could result in one of the parties being responsible for paying some or all of the marital debt. Consulting with a family law attorney can allow a party to determine the amount and extent of obligations that will remain after the divorce has been finalized.
Source: FindLaw, “Credit and Divorce”, accessed on Feb. 11, 2015