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How divorce can impact credit scores

| May 8, 2019 | Divorce |

Overlooking financial issues that could impact credit scores could have long-term consequences for anyone ending a marriage in Maryland. On a positive note, simply getting a divorce does not automatically affect somebody’s credit score. Even so, it’s not always easy to separate joint financial obligations post-divorce.

Creditors and debt collectors do not honor divorce decrees, even if the documents state who is responsible for what debt obligations. For example, if a settlement agreement states one ex will keep the car and be solely responsible for payments, the other spouse’s credit score could still be affected if payments are missed. Also, getting divorced doesn’t automatically end responsibility for joint accounts opened during the marriage. Even if the divorce decree shifts responsibility for certain accounts to one spouse, credit reports will reflect the account as being open for both former spouses.

In general, women tend to be affected disproportionately financially when a marriage ends. This is partly because of earnings discrepancies. Unfortunately, bad credit could make it difficult to keep up with payments without a second source of income. According to a survey by a leading credit reporting agency, more than half of the divorced women questioned said their credit scores declined while they were married.

Regardless of gender, a divorce attorney may recommend that a client looking to reduce credit-related risks close all joint accounts and corporate with their ex to make arrangements to pay those debts off. If a divorce is contentious, an attorney might suggest that credit reports be temporarily frozen to prevent a vindictive spouse from adding to debt or opening fraudulent accounts. A lawyer sometimes recommends bringing in a financial adviser to further help a client regroup financially, especially if marital debt is fairly significant.

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