Credit Considerations in Divorce
If you are considering a divorce, you probably know that there are many financial considerations to evaluate. Property division, child support, and spousal support are all issues that must be sorted out before a divorce is completed. While making these decisions, spouses must consider the effect on their assets, taxes, and credit. Credit considerations may not initially be the first thing on a divorcing spouse’s mind, but they may be very important, particularly when finances are entirely comingled. At Reddin & Singer, our Milwaukee divorce lawyers can help you evaluate the potential impact on your credit if you are getting a divorce in Wisconsin.Understanding Credit Considerations in Divorce
Your credit score has a significant impact on your ability to borrow money, purchase a home, or even obtain a credit card. While credit scores are assigned individually, they are often affected by joint accounts and joint purchases that spouses make. When you are in the process of divorce, it is important to take tally of these accounts and ensure that you have full control over them. First, if your spouse and you have any joint accounts, you will want to have these accounts emptied and closed. You do not want your spouse to continue to have access to your accounts or the ability to overspend on them. If you are concerned that accounts may exist of which you are not aware, the easiest thing to do is to call your banks and request a list of all of your open accounts.
Even if your accounts are individual, if your spouse has a card or access to a certain account online, they may be able to use it in a way that is detrimental to your credit. Divorcing spouses may want to consider changing passwords, canceling cards, and taking other protective measures to ensure that individual accounts are not compromised.
In addition to savings and bank accounts, spouses must also be wary of joint debt obligations, such as a car or mortgage. If both spouses’ names are on the loan agreements for these debts, both spouses may be held responsible for them. This means that even if your ex-spouse agrees to pay one of the debts during the settlement process, if they fail to do so, you will be on the hook for the loan. While you may report the violation of the agreement to the court, the damage to your credit may already be done. In such circumstances, at the very least, you should require the ability to monitor these debts and ensure that they are being paid on time. Even better, spouses may consider refinancing joint debts to remove the name of the spouse who will no longer be responsible for them.
In the worst of credit situations, one spouse may learn that the other intends to declare bankruptcy. While going through bankruptcy will address any debts that the spouse may individually have, it does not mean that joint debts will simply disappear. Instead, creditors may look to other co-signers on loans or guarantors of debts to obtain outstanding payment amounts owed. Often, these burdens may fall on the spouse who has not declared bankruptcy, and it may even lead to bankruptcy for that spouse as well, which may be devastating for their credit. This is yet another reason why it may be important to separate financial obligations from the other spouse as soon as possible after the divorce process has started.Consult a Milwaukee Lawyer During a Divorce Proceeding
Spouses who are divorcing rightfully want to protect their access to joint finances as much as possible during the divorce process. However, this access must be weighed against the potential exposure and risks to credit that may result from continuing to maintain joint debts and financial obligations. If you are considering a divorce and are concerned about how it may affect your credit, it is important that you speak with a family law attorney as soon as possible. At Reddin & Singer, our Milwaukee divorce attorneys have decades of experience in guiding people through the divorce process and can answer any questions, financial or personal, that you may have. Contact our office at (414) 271-6400 or online to set up a free appointment. We represent people in Milwaukee, Mequon, Racine, West Bend, Waukesha, and other communities in Racine, Washington, Milwaukee, Ozaukee, and Waukesha Counties.