Property division, credit reports and your future
The bills that you’ve amassed while you were married don’t go away when you decide to get a divorce. Instead, you and your ex will have to divide the debts just like you do the assets. This can be problematic if you have credit card accounts and others that will end up on your credit report when you get to the property division process.
Many people don’t stop to think about how their credit might be impacted by the divorce. Unfortunately, this oversight can be catastrophic down the road. Here are some important points to remember about how these two matters are intertwined:
Creditors aren’t part of the divorce
When you and your ex go through property division, you are working out an agreement. The creditors to whom you owe money aren’t part of it, so they don’t have to abide by the terms of the divorce. In short, this means that even if you and your ex determine who is going to pay what, the creditors can still hold both parties accountable for the balance.
Handling joint accounts during property division
If you and your ex have joint accounts, there are a few ways to handle the situation. One of these is that you can talk to the creditors to find out if the person who is responsible for the account can open an individual account and transfer the balance. Another option is that you can sell off some assets and use the money to pay off joint debts so neither person is responsible for paying for them. Finally, you can split the debts and hope that your ex pays the bill without any issues.
Working out your finances in the property division
Your finances will change quite a bit when you go through a divorce. One of the important things to remember is that you will have to count on your own income for support now. Setting a budget before the property division negotiations can help you to determine what you are able to afford. As you look at the assets that you might walk away with, try to figure out whether you are able to keep up with the cost of the assets.
You should try to build your credit and establish a savings account. Your credit might dip due to the divorce since your debt-to-income ratio changes. Having savings enables you to draw from that money when there is an emergency or unexpected bill that has to be taken care of promptly.
