A divorce or separation from your partner is one of the most stressful events an individual can ever experience. During and even after the dissolution of the relationship or marriage, the spouses can find it hard to cope with feelings of regret; failure, or loss and both spouses can financially struggle as well.
Alimony, child support, asset division, and legal fees can ruin even healthy finances. However, contrary to what you may think, none of these divorce aspects can directly impact your credit score.
If you’re currently dealing with a marital split, below are some of the negative and positive ways separation can indirectly affect your credit and how to prepare yourself and recover financially.
The Ex-Spouse Refuses To Pay For The Joint Accounts
Most spouses share joint credit accounts such as credit cards or mortgages. In few cases, the accounts can remain in the names of both spouses even after the divorce. However, if the ex-spouse stops paying or starts to make late payments, you’ll still be liable for such bills. Failure to cover the payments will hurt your credit.
The lenders want to get paid regardless of who makes the payment and regardless of what the divorce contract states, if you aren’t on cooperative and amicable terms with the ex-spouse, you may not be able to work on a beneficial payment arrangement.
Your divorce proceedings prove too costly and leave you in debt
An expensive divorce might cause you to miss loan or bill payments, subject to the lien on your home, or result in lots of debt, most of which will ultimately hurt your credit. According to Joleena Louis, a divorce lawyer, she says that a complicated custody proceeding could cost anywhere between £28,500 and many people do not have that type of money and may be forced to borrow or even get into more debts.
Joleena tells her clients to consider using marital assets such as a car or house to pay off the existing debts. Decreasing your expenses, increasing your income, and drafting a post-divorce budget to keep the credit in check are some of the steps you should take to deal with the financial issues.
Your Ex-Spouse Doesn’t Want You To Sell The Joint Assets
Financial disagreements are in most cases the main cause of divorce and such issues can even continue after the split. If, for instance, the ex-spouse does not want to sell any of the marital assets, such as the main family residence, then both spouses will still be liable for the loan and if left unchecked can wreck your credit score.
Overall, with credit products or loans, after the asset has been fully refinanced in the name of your ex-spouse, the slate will be wiped clean and your financial and legal responsibility is absolved.
Rebuild Your Credit After Finalization Of Your Divorce
If your previous marriage left you in financial trouble, a divorce might be the best thing to happen to your credit and yourself. It’s an opportunity to start your financial and personal life again and make positive changes.
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