You built a life with someone here in Seattle and now that life has changed—and
you’re getting divorced. As you prepare yourself for this change,
one of the things that you should give some thought to is your credit.
Good credit can give you the opportunity to move on to a fresh new start
more easily, while bad credit or a burden of debts can become one of your
biggest obstacles after the divorce. Therefore, it is vital for you to
understand the pitfalls surrounding credit as well as the ways you can
protect it and your future.
Who is responsible for debt in a divorce
Bankrate states is that if a debt is in your name, you are the one held
responsible for it. Often times, spouses make the mistake of believing
that their soon-to-be ex will take care of a credit card or a car payment,
only to find that the opposite has happened. Often a spouse might want
to “get back” at you if there is bitterness about the breakup
by not making payments as they were done before, or the spouse may have
decided to focus on his or her own finances instead.
A divorce attorney would explain to you that debt acquired during your
marriage is usually considered
community property. This means that some of it will be assigned to you and some of it will
go to your ex. However, a divorce settlement assigning your debt to your
ex is not a guarantee. Lenders are not required to abide by these agreements
and have the legal right to pursue you if your ex fails to make payments.
Handling joint accounts
If you have been married for a long time, there are probably several accounts
(bank accounts, credit cards, mortgages, lines of credit, mobile phone
account, household bills, car loans, etc.) that are under both your name
and your ex’s name. Experian says one way to avoid problems is to
make sure that joint accounts are either closed or that your name is removed
from accounts you are no longer responsible for, and that your spouse
is removed from the accounts you wish to keep.
If you fail to take care of these accounts,
your credit will suffer if your ex misses payments or becomes overdrawn. Therefore, you should
sit down and make a list of all the accounts that may have your name on
it. This includes vehicles, homes, credit cards, medical debt and rental
Once you have that list created, the next step is to figure out what debt
you will take on and what debt your ex will take. This will probably take
some time. In some cases you may choose to sell assets to pay off joint
debt, which could raise your credit score. In other cases, you might want
to keep a specific asset like a car or the family home. Once you make
those decisions, you should take the initiative to call the lenders and
go through the process of making sure the debt is correctly transferred
to you or to your ex.
Divorce and credit can be a tricky topic, especially if you have an ex
who ran up bills. With Washington’s community property law, this
means you could be stuck with up to half of them, which will make your
credit take a nose dive, if it hasn’t already. In such situations,
there are options that you can take such as restructuring your debt through
filing for bankruptcy or you may simply have to start rebuilding your
credit from scratch.
If you are facing a divorce and are concerned about how your property and
debt will be divided, the attorneys at McKinley Irvin family law are experienced
with divorce cases involving complex financial assets and issues. We invite
you to contact us to schedule a consultation to review your options.