Credit status after divorce

Business man with suitcase full of cash

Some Texas residents may be interested in the way finances are affected by divorce. After a divorce, financial dynamics may change. The cost of living may lessen, but household income levels might shrink and other costs such as alimony or child support may be added. The division of property may result in one spouse remaining in the home while the other spouse pays the mortgage.

Transition issues during a divorce may include joint accounts such as credit cards. If both names are on the account, both individuals have an obligation to pay the balance. Sometimes, as part of the divorce settlement, one spouse agrees to pay the existing charges. However, if he or she does not remain faithful to the agreement, creditors may seek payment from the other ex-spouse.

It is important to divest oneself from the joint account as soon as possible. In addition, around the time the divorce happens, it is a good idea to monitor the account to make sure new charges do not appear. Charges not paid off at divorce and made during the marriage may influence an ex-spouse’s credit report if the other spouse fails to pay.

Establishing credit is important when the divorce is over. However, if an ex-spouse who agrees to pay the mortgage fails to do that, the other spouse may find themselves in serious financial circumstances. On occasion, foreclosure proceedings against the pre-divorce home may lead a spouse with a newly lowered income to be overwhelmed by debt, particularly if his or her ex declared bankruptcy.

Consulting with an attorney may help an ex-spouse understand the available options. The attorney may provide insight into eligibility for filing Chapter 7 bankruptcy. If this option is a viable alternative, the attorney may help file in the United States Bankruptcy Court.