How to Protect Your Credit in a Michigan Divorce

 Posted on October 07, 2021 in Divorce

There is no denying the impact that a divorce has on a person’s life. Even if they are the spouse who wants to end the marriage, there could still be effects on their family and social relationships that they may find jarring. There is also the financial impact a divorce has. Many people find that after a divorce, their credit score has gone down. It is not the act of divorcing that can cause this decrease, but rather the financial obligations and standing that happens during and after the divorce process. The following are some steps you can take to help minimize that impact.

Protecting Credit Scores

Surveys have found that approximately 55 percent of women and 40 percent of men find that their divorce creates a negative impact on their credit score. While women experience the higher impact, they also report higher incidents of their former spouse ruining their credit – 50 percent – compared to only 37 percent of men who face the same consequences because of their former spouse.

In a divorce, the court will determine which spouse will be responsible for which marital debts, just as it does for the division of assets and property the couple has acquired during the marriage. During the divorce process, there is often a period of time, between the separation and the final decree of divorce, where both spouses may still be responsible for certain marital debts, such as joint credit lines and credit cards. Regardless of what the agreement may be between the spouses as to who should be paying these debts during the divorce process, if the responsible spouse misses payments, it could affect both spouses’ credit scores.

The first step you should take to protect your credit score is to pull your credit report to make sure you are aware of all accounts that are linked to your credit file. You can obtain a free credit report from one of the three major credit bureaus, Equifax, Experian, and TransUnion.

Look over your report and note any joint accounts you have with your spouse. These are the accounts you will also be liable for until a decision is made to close the account. You should also check your report to see if you have any accounts that are in your name but where you added your spouse as an authorized user. You will want their name removed if you do not want them to be able to charge to that account any longer. Make sure if you do this, however, there is no court order that has been issued barring you from doing so. It is always a good idea to check with your attorney first. 

You will not be allowed to close any joint accounts unless your spouse also agrees, and only if there is no balance. If there is anything owed on the account, the creditor will want it paid in full before the account will be closed.

Until you can get this matter settled, it is a good idea to at least contact your creditors to let them know of the change in your marital status. They may also be able to provide insight into options they may have for transferring any debt that will be left over after the divorce, depending on the final negotiations and settlement between you and your spouse.

Contact an Oakland County Divorce Attorney

If you are considering divorcing your spouse, it is important to be well prepared long before you file your actual petition. A skilled Farmington Hills divorce lawyer can help. Call Elkouri Heath, PLC at 248-344-9700 to schedule a free consultation and find out what legal options are best suited for your situation.

Source:

https://www.cnbc.com/select/does-divorce-affect-credit-score/