Will your credit will be affected by your divorce? In short, it can. In
marriage, couples oftentimes open individual and joint checking accounts
in order to best manage their family's finances. This belongs solely
to the individual. To the creditor, it is only the credit history of the
person that opened the account that is considered. If the person does
not have a strong financial history, an individual account may be more
of a detriment to their financial standing.
In states that are community property states, such as California, the debt
obtained during marriage may be the responsibility of both spouses; further,
the debts of one spouse may appear on the credit report of the other if
it is authorized to do so. Account authorization means that another person
will have access to the account, but all debt obtained is the responsibility
of the individual account holder.
If an individual account is opened, the credit record of the person that
opened it will not be affected by anyone else but themselves.
A joint account can be considered a contract to pay off debts with your
spouse. A person in liable for this contract regardless of a change in
marital status. Joint accounts mean that both names are reported on the
account and any debt incurred under this account is the responsibility
of both parties to pay off. If one party is not paying into the account,
the other party is held liable.
A joint account can be a benefit in applying for a loan, but it also holds
both names on the account responsible for the debt. In the case of divorce,
jointly-held accounts can negatively affect the credit score of one spouse
if the other refuses to pay.
Divorce & Credit
seeking a divorce and have joint accounts? Obtain an accurate report of the ways that your
credit will be affected by a divorce. It is important to continue making
credit payments to appropriate accounts and to close joint bank accounts
or accounts where the other spouse is an authorized user.
It is the responsibility of the individual to make appropriate changes,
not the creditors. It may further be necessary to reply for credit or
refinance in order to ensure the success of their credit.
Has your credit suffered as a result of divorce? Are you wondering how
you can protect your credit in an upcoming divorce?
Contact a Mission Viejo divorce attorney at The Hunter Law Group to talk with a professional about your credit rights.