The effect of divorce on credit

by | Jan 4, 2018 | Divorce |

Divorce may have an effect on the credit of some people in California. For example, one person might want to keep the home, but this could involve refinancing and taking on more debt.

Other ways could be related to how shared debt is divided and whether the split is even. Even if it is, one spouse may have acted unethically and not disclosed debt that was incurred in the other spouse’s name. One person may simply refuse to pay a portion of the debt. If the two have joint accounts, one may have incurred charges that both are responsible for. The likelihood of these types of problems increases if the divorce becomes more acrimonious.

Some other issues with debt may occur even if neither person is actively trying to create issues. For example, in the turmoil of a divorce, it can be easy to miss payments such as a utility bill. Some people may simply misunderstand the divorce decree and what their responsibilities are. Other credit issues may be a byproduct of the divorce. For example, going to one income from two could cause a person to struggle financially.

It is important for people to protect themselves financially during a divorce. People often suffer a drop in their standard of living. Therefore, people may want to discuss their plans with an attorney. Because divorce negotiations can be difficult and emotional, some people may try to rush through them in order to get them over with and agree to terms that leave them at a financial disadvantage. However, in California, a community property state, each person is entitled to half of the property acquired since the marriage with a few exceptions, such as inheritances that are not commingled with the marital finances.