The financial effects of divorce in Kentucky can linger long after other emotional and practical matters have been sorted out. While people may expect changes to their housing, retirement funds and other financial assets after a divorce, one thing that they may not expect are the potential dangers to their credit score. People can take action during their divorce to protect their credit report, which can be important for obtaining a new mortgage, a credit card or other type of loan.
Of course, divorce does not automatically damage a credit score; marital status is not considered when calculating an individual’s report. However, the circumstances around the dissolution of a marriage can lead to decisions that can have a lasting impact on a person’s credit. One thing to keep in mind is that creditors are not parties to the divorce decree. Therefore, when an account is held jointly, both people are responsible for the debt, even when they may have decided during the divorce settlement that one spouse would handle the payments. This is why it is best to transfer balances to an individual credit card or remove the other person from the account.
If the other spouse does not pay regularly, the negative credit impact will appear on both people’s credit reports. One former spouse may even need to make payments or pay off a bill in order to avoid a default. While that person could pursue the other party in court for the amount, it would not mitigate the credit problems that could follow.
Getting rid of joint accounts and moving toward individual credit can be an important step to disentangle finances after a divorce. A family law attorney can provide important guidance not only in reaching an agreement on asset division and other matters but also in handling post-divorce financial changes.