It’s well-known that a divorce has the potential to substantially affect your financial situation. Depending on the nature of the split, you may be required to give up assets as part of the property division process and you could be required to pays support payments on an ongoing basis.
But how does all of this impact your credit rating? Will a divorce be held against you in the future, making it more difficult to manage significant transactions?
No negative impact from the divorce itself
The good news is that the divorce itself isn’t going to damage your credit rating.
The bad news is that financial fallout from the divorce can be troublesome if you don’t take the time to plan and adjust your lifestyle accordingly.
Many partners will have accumulated debt together during the marriage. During the divorce settlement, one partner may be given responsibility for managing payments in each account. However, if the responsible party fails to make payments then both parties may still be responsible for the negative impact to the credit rating.
A payment may be missed out of carelessness, financial trouble or spite. For this reason, it’s important to continue to monitor the payments and ensure the minimum payment has been sent before the due date in order to avoid any problems.
Close all joint accounts
One of the first steps you should take when you understand that a divorce is inevitable is to close all accounts that you have together with your soon-to-be-ex. Collect all available information on these accounts as it may be important for future decisions.
The last thing you want is your ex making a large purchase on a joint account and throwing a wrench into the property division and settlement process.
A jointly held mortgage is typically something that parties need to deal with to ensure that this financial obligation doesn’t continue to burden both parties when one party may wish to try to secure a mortgage for their own property following the separation.
Creating a fresh budget
The changes to your finances following your divorce need to be reflected in a new budget for yourself and any children that you may be responsible for. Take into account your new income and any support payments.
It’s a good idea to make sure that you can manage your bills without relying on spousal support payments – just in case your ex gets vindictive or falls into financial trouble and can’t continue to pay support.
Get in touch with your Family Lawyer as soon as possible after you realize a divorce is going to happen. They will be able to offer invaluable advice on how to manage your finances in preparation for the upcoming divorce so that you are in a stable situation afterwards.