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How may a divorce affect my credit?

On Behalf of | Jan 14, 2022 | Bankruptcy Reform

Under Florida’s equitable distribution laws, divorcing spouses divide their assets and liabilities fairly. Brides.com notes that courts in an equitable distribution state may order the spouse who benefitted most from a debt to take responsibility for it.

If you and your ex-spouse had joint credit card accounts your divorce settlement may include paying the remaining balances. During a divorce, spouses generally discuss who may keep a particular asset. You may have an option to acquire an asset in exchange for taking on full responsibility for paying a shared household debt.

Joint credit card debts may influence both spouses’ scores

Some couples may agree to divide their joint credit card debts. As reported by Credit.com, one spouse may take one joint account’s debt and the other spouse may take over a different account. If your ex-spouse fails to make monthly payments, however, it may affect your credit.

Creditors may report late or missed payments on a joint account to the major credit reporting bureaus. According to Experian, both individuals associated with an account may find negative information on their reports. Two ex-spouses may experience a lower credit score as a result of one making late payments.

Closed accounts may not improve an individual’s score

Divorcing couples may also agree to close their joint accounts and pay off their debts. Closing your credit card accounts, however, may not place you in a good position to refinance a mortgage. You may also find it difficult to obtain new credit as a single individual.

Financial issues often contribute to a marriage breakup when one spouse spends money and the other prefers to save. If you experience financial hardship after a divorce, a bankruptcy filing may offer relief and a way to move forward.

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