How Does Divorce Affect a Person’s Credit?

Going through a divorce can impact every aspect of your life, including your financial standing and your credit worthiness. Many people don’t realize how much of an impact the terms of their divorce can have on their future. 

One specific point to consider is property division. This means not only dividing assets, but it also means splitting up debts. Both of these points can significantly change the trajectory of each person’s finances.

Why is property division important?

The decisions that happen during property division can make or break a person. Every asset must be considered from a logical standpoint because the person must factor in the overall costs of trying to keep certain assets. In some cases, things like insurance and upkeep may be prohibitive. 

Another factor to consider is that some assets may need to be sold to pay off debts. If marital debts aren’t paid off during the property division process, they must be assigned to a person to pay it. The challenge here is that creditors aren’t part of the divorce so they don’t have to abide by the terms of the property division. 

If a person’s ex fails to pay an account assigned to that ex, both parties will take a hit on their credit report if the account was a joint one. This may make paying off joint debts a priority for some people going through divorce. Working with someone who can help them to determine what arrangements are best for property division is beneficial because it may help their future financial stability.