May 3, 2022
How to Divorce and Keep Your Credit Healthy
One of the goals of a marital settlement agreement in a divorce is to divide joint assets and debts and put them in individual names. The division of debt can be concerning as the party left with the burden will have to rely on one income to make the required payments. Marital status is not used as a factor in your credit score, but a divorce can cause financial problems if debt payments are late or missed entirely. It is important the agreement is fair regarding debt as well as assets since keeping debt low and payments current are two important keys to keeping your credit score from dropping after a divorce.
Michael Routh, an Attorney at Alpha Center for Divorce Mediation, discusses the division of assets and debt during divorce and how to keep your credit healthy.
One of the biggest challenges after a divorce is to match your lifestyle to your income. With the two-income household divided, there is a good chance major changes will need to be put in place. A budget is a great idea to assist with these changes, so you can understand what you can and cannot afford. Expenses can be prioritized, emphasizing the bills and loans which have the greatest impact on your credit score. It is important to set aside lofty expectations for expensive items and come terms with more practical ideas.
Within the settlement agreement, make sure any financial ties with your ex-spouse are severed. Consider using some of the marital assets to pay off joint debts from the marriage. Attempt to live within the budget of your individual income, excluding any support payments, so the reliance on these is minimal. If the payee was to lose their job or not make the payments, you do not want to be in financial jeopardy. Further, remember to remove your ex from any of your credit cards as an authorized user. Any unknown expenditures could create financial hardship.
Finally, make sure your ex is making the payments on any joint debt specified in the settlement agreement. It is important to protect your credit and avoid any late notices generated through no fault of your own. If the payments are not being made as specified, do your best to make the minimum payment allowed and then ask for reimbursement.
Accepting guidance from a firm that specializes in the practice of divorce mediation will ensure a smooth path along the difficult road of divorce. Alpha’s program may not be fast and cheap, but it will certainly save you time and money over the long run. Let our expertise help ensure the best possible outcome for you, your spouse, and your family.
Alpha Center for Divorce Mediation