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Steps to protect credit scores during a divorce

On Behalf of | May 9, 2019 | Divorce

Divorce involves the separation of financial lives. Although this process does not necessarily damage the credit scores of estranged Virginia couples, it could result in financial distress and damaged credit records. Jointly held credit accounts, like mortgages or credit cards, create opportunities for negative credit scores after a divorce. Although a divorce decree might require one party to pay a credit card bill, the creditor still looks to both parties for payment on joint accounts. Missed payments ding the credit scores of people who were expecting former spouses to meet their obligations.

To reduce the chance of this happening, people entering the divorce process should close their joint credit cards. Removing a former partner as an authorized user on a credit account might suffice. People should also freeze their credit reports. This prevents an angry ex-spouse from opening fraudulent accounts in the other person’s name. Ideally, splitting spouses will cooperate to resolve their jointly-held loans. Assets like homes and vehicles could be sold to pay off the loans. Alternatively, one party could refinance assets under a single name when possible.

These tactics could protect people from the stigma of unpaid bills on their credit reports. Taking steps to avoid setbacks involving debts could ease a person’s transition to life under a single income. Divorce typically reduces household income, especially for women because they tend to be paid less than men.

Legal advice could prepare a person to make important financial decisions when negotiating a divorce. An attorney could alert a person to rights to marital property and potentially improve the financial outcome of a divorce settlement. Knowledge of state guidelines concerning the calculation of child support might secure greater stability for a person as well.