Divorce can not only wreak havoc on your emotional state, it can have a significant impact on your financial health as well. Many people discover this too late and end up having to file for bankruptcy within a year of divorce.
The process of divorce itself does not automatically hurt a person’s credit score. In fact, a person’s marital status is not even reflected on a his or her credit report. Problems arise when decisions made during settlement negotiations in a divorce come back to haunt one or both parties later. What complicates the issue is that divorce can lead to a lot of non-dischargeable debt, such as spousal or child support, which cannot be discharged in bankruptcy.
A divorce decree will take joint assets and debts and assign responsibility for these debts or ownership of the asset to one party. However, when it comes to creditors, the divorce decree is only a piece of paper. For the most part, creditors or debt collectors do not honor divorce decrees, which means if your ex-spouse was ordered to pay on a debt but does not follow through on this obligation, your credit could suffer, as well.
Additionally, joint accounts will continue to stay on both spouse’s credit reports, regardless of the divorce decree. If your ex-spouse is responsible for continuing to pay on a joint account and misses a payment, this late payment will not just show up on the ex-spouse’s credit report but yours as well.
Studies have shown that divorce can be financially harder on women’s credit although the impact is not necessarily direct. According to a study by Experian, 54 percent of divorced women surveyed said that their credit score dropped after the end of their marriage. Because of the unique challenges that women face when it comes to finances and family dynamics, they can be at a distinct disadvantage after a marriage ends.
Certain steps can be taken to protect your credit following a divorce. After the divorce is final, make sure and close any joint credit cards shared with your ex-spouse and remove him or her as an authorized user from any of the credit cards that are in your sole name. It can also help to freeze your credit with all three credit reporting agencies in the event your ex-spouse tries to ruin your credit actively by opening fraudulent accounts in your name.
Sometimes, no matter how hard you try, your credit will take a hit after a divorce. For example, if you were a stay-at-home parent in a marriage and are suddenly responsible for extra expenses, you may struggle with making payments on time, which could hurt your credit. Many individuals find themselves filing for bankruptcy following a divorce to receive protection from creditors and get their financial future back on track. If you are struggling with insurmountable debt following your divorce, our experienced Miami bankruptcy attorneys can help.
As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.