If you are getting divorced, chances are you are concerned about your divorce settlement. Your attention may be focused on what you will get in the settlement – which marital assets you hope to gain and possibly what kind of support you will receive or be ordered to pay. But one area you might not have carefully considered is your marital debt and how that debt leaves your credit vulnerable, no matter what the divorce courts decide. It is important that you understand what you owe, how the debt is going to be handled and your level of credit exposure. What you might not realize is even if your divorce decree gives a debt to your ex-spouse and makes your ex-spouse accountable for paying it, divorce courts have no jurisdiction over creditors. Most of the time, creditors do not care about the divorce settlement and agreement. Ouch! Your divorce and credit score stay married long after you do. Divorce courts do not have the power to wipe out your obligations to lenders. Credit cards, auto loans, mortgage companies and other debtors will hold you liable as long as your name is attached to the debt. Even if the divorce settlement orders your ex-spouse to pay that debt, your credit is going to take a hit and you can be sued for the amount owed. For added protection, you will want to add what’s called a “hold-harmless” clause for debts to your divorce settlement. This clause allows the party who was not ordered liable, but has to pay because the legally responsible ex is not paying, go after their ex for the cost of back payments, damages, interest and attorneys’ fees. When you are getting divorced, you have to protect your own best interests over the long run. If you do not have a solid understanding of your credit obligations as they relate to the divorce settlement, you could create financial problems for yourself for years to come.
Posted on: Wed, 18 Sep 2013 14:21:51 +0000
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