How Credit is Affected by Divorce

Utah divorcees may be wondering how credit is affected when a divorce is filed. A person might think their credit is protected if their ex-partner opened an individual account during their marriage. However, while the nature of this type of credit typically mandates that only the individual the account is assigned to is responsible for the debt, some states have different specifications in place that dictate that both parties are responsible. This applies if the account was obtained during the marriage.

If a joint account is opened, both parties who were married are assigned the debt, even if the divorce court designated that only one of the individuals was responsible for the debt. The disadvantage of obtaining a joint account is that it might be grounds for an ex-spouse who is refusing to pay the debt to negatively impact both people’s credit rating.

When a person opens an individual account, they can also designate another authorized user, such as their spouse. Both individuals’ credit history may be obtained to assess credit-worthiness. This type of credit can be beneficial to people who might not otherwise qualify for credit on their own. However, while they are both authorized to use the account, the individual who opened the account may be solely responsible for the debt, even if the authorized user was an ex-spouse.

Understanding how credit accounts and divorce are interlinked is important when considering a divorce. Individuals who fail to make regular payments, even after a divorce is finalized, might be putting their own credit score at risk, even if the other party was designated responsibility of the account. Determining the disposition of marital property can be complicated when credit accounts are a factor. A divorce attorney might be able to assist a person in maintaining their credit-worthiness during a divorce.

Source: FindLaw, “Credit and Divorce,” Accessed Feb. 4, 2015