Credit Consequences of Divorce

A divorce in itself does not negatively impact credit scores. But a divorce can have several unintended negative credit consequences.  A critical point is that a divorce decree does not supersede an agreement a borrower(s) makes with a creditor.

A divorce decree does not eliminate responsibility for debt held jointly.  If an ex-spouse is a joint account holder or an authorized user on an account they may continue to use the account even if the divorce decree says differently.  If their choices then create negative information on an account, refuting responsibility for negative information using your divorce decree will lead only to disappointment and frustration.   It is a situation where an ounce of prevention is better than a pound of cure. 

It is critical to be proactive with creditors when going through divorce.  Each creditor will handle it differently and it pays to do some homework.  Usually they will require closing joint accounts and establishing new individual accounts.  They can also remove ex-spouses who are authorized users.  I would also recommend going one step further and notifying creditors in writing to make them aware of the divorce and state that you will not be held responsible for credit incurred after your letter.  This is a defense if an ex-spouse attempts to re-open a joint account that was closed or attempts to use a card that they were an authorized user on.

Getting a divorce is a stressful and difficult situation for anyone to face.  Not handled properly, this stressful process can be compounded many years later with continued credit issues.  We deal with creditors every day and are skilled at advocating for our client’s best interests so if you or someone you know find yourself in this unfortunate situation, we are a resource to help navigate these waters.

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