Protecting Your Credit After a Divorce

John Heath - Directing Attorney for Lexington LawWith divorce rates hovering at 50%, approximately 1 out of 2 married persons will face divorce in their lifetime. While many recognize that the divorce process can be at best unpleasant and in some cases lengthy, many do not realize that the divorce may impact their credit reporting and scoring after the divorce has finished.

In many cases there will be an award of joint marital property and a division of joint marital debts to one spouse or another. With these awards and divisions, come also serious potential pitfalls. For example, a divorced spouse may suffer unemployment or illness after the divorce that tightens their income and/or prevents them from maintaining the obligations either awarded or divided during the divorce. In some cases a divorced spouse may continue to resent their former partner and will purposely refuse to continue payments on their obligations to the detriment of their former spouse. In both cases if the obligation was a joint obligation, the former spouse may still be liable to the parties’ joint creditor. That creditor can seek to collect the obligation through their own efforts, a collection agency and/or the courts. The creditor and the collection agency may report the failure to make payments on the obligation not only on the divorced spouse’s credit reports but the former spouse’s credit reports too. This may detrimentally affect the former spouse’s credit reports.

With this in mind, what can you do to protect yourself? First, you can provide your creditors with notice of the divorce and the division of obligations between the parties. For example if your former spouse was awarded the marital home and it is subject to a mortgage held by Bank A, submit a copy of your divorce decree or judgment to Bank A detailing that your former spouse is now responsible for your mortgage. Second, if you know your former spouse has defaulted on their obligation, the court that issued the divorce decree or judgment may have a procedure to question and remedy the default.[1]

As always, each case is unique, and this situation may never happen to you. If this situation has occurred, please seek the help of an experienced family law attorney and an attorney who focuses on consumer credit report repair.

 

 


[1] Please contact a local attorney in your locale to discuss your options.