Most people who want a divorce also want to complete the process as quickly as possible, letting them move forward with their lives. Unfortunately, what happens during divorce can affect your life after you sign the final papers.
Your financial profile is likely going to change. Among the changes could be the amount of debt that you walk away with, which can affect your financial options following the divorce.
Be cautious when accepting liability for marital debt
If you are negotiating the terms of property division with your spouse, it can be tempting to assume more debt in order to also keep a higher portion of marital assets. For example, you might agree to be responsible for credit card debt in order to offset the value you gain by keeping the house – even if your spouse was the one who created the debt.
However, not all debt is equal. Before making a decision, consult with your attorney regarding the interest rate, penalties, principal and other factors related to the debt. Whether the debt is a mortgage, an auto loan or student loans,
If a judge is deciding who keeps debt in a divorce trial, however, you might not have a choice. The judge will assign debt and property to you, although your attorney can advocate for your interests.
How your credit score might change
Depending on how much you earn and your ability to pay off the debt quickly, your credit score may suffer a decline. If your credit score decreases due to debt leftover from the marriage, you could have a difficult time getting approved for auto loans, a mortgage for a new home, business loans and more. Rebuilding credit can take a long time – and money.
Because property division could affect your future financial flexibility, it is best to be well-informed during the divorce. Your attorney can also help you protect your credit score in other ways before and after divorce, such as separating your accounts or refinancing.