The effects of divorce are not limited to the emotional scars it can cause the couple and their children but can also have a disastrous effect on your credit as well. Fortunately it is much easier to prevent the financial effects of divorce, but many couples get so wrapped up in their anger and bitterness that they overlook these simple steps. Those who come out of a divorce and have to file bankruptcy are usually the result of a bitter ex-spouse or an unfair judge. When the couple can work together to resolve the financial issues, both can save their credit standing and be ready to begin their new lives when everything is final.
How do the effects of divorce damage your credit? There are several ways this can happen.
• The spouse remaining in the marital home is unwilling or unable to make the payments on the home and it goes into default.
• The spouse ordered by the court to make the payments on the marital home is unwilling to do so (this is especially true when the spouse no longer living in the home is ordered to make the payments).
• One or both of the parties fails to make the payments on any of their joint debts either because of blatant refusal or the assumption the other one is making the payments.
• Inability of one of the parties to make the payments the court ordered at the request of the other party. Quite often bitter spouses demand more than the other party can reasonably afford, and it causes financial problems on both ends.
• The custodial parent makes unfair demands for child support payments then using the payments for other things and demanding the ex-spouse provide other things the children need that should have been covered by child support.
In most cases the effects of divorce on the financial well being of both husband and wife remain intact as long as both have good paying jobs. The problems develop when the custodial parent that has never worked is now forced to seek work and the non-custodial parent is unwilling to provide temporary support. It may also happen because the custodial parent refuses to seek work and thinks the ex-spouse should not only support the children but should continue to support her in the same lifestyle she had during her marriage. While the court may support this line of thinking for those who have been married a long time (usually at least ten years), it is not likely to support this thinking for couples married just a few years.
Another thing many couples fail to consider when it comes to looking at the financial effects of divorce is the long-term effect. Negative information can remain on your credit report for up to seven years; it is much easier to prevent the damage by paying the debts than to rebuild your credit after the fact, especially in today’s market when creditors are tightening the criteria for granting credit. Even if the court says your spouse must pay those debts, it does not remove your name from the contract—you are still equally responsible in the eyes of the creditor.