Many Minnesota couples know that the financial effects of a divorce can have long-term impacts that linger on even after the emotional and practical issues are resolved. However, the first matter that come to mind may be how to divide the marital home or retirement funds, rather than a potential impact on each spouse’s credit. While marital status is not taken into account when calculating a person’s credit score, the end of a relationship can still have a lasting impact. People can take precautions in order to protect their credit score and emerge from a divorce financially healthy.
Joint accounts are common among married people, and these can include home mortgages, credit cards and even personal or auto loans. The division of property during a divorce includes not only assets but also debts. However, the agreement that is part of the divorce decree does not bind creditors. Even if one spouse agrees to pay a certain debt, the creditor can go after the other spouse if he or she remains on the account. While that party may have the right to pursue the other in court, the financial impact could be long-lasting.
This is one reason why people should be sure to actively close joint accounts at the end of a marriage and not just make agreements for who will pay each account. This can include closing credit cards, bank accounts or any other joint loans and transferring the balance into the name of the spouse who is to be responsible for that particular debt.
Divorce is about ending a romantic relationship, but it also involves a financial disentanglement. A family law attorney can represent a divorcing client and work to obtain a fair settlement on legal and financial issues including property division and spousal support.