How Divorce Can Hurt Your Credit Score

North Carolina State Bar Certified Family Law Specialist Matthew R. Arnold answers the question “How long does getting a divorce take?”


Divorce can be a trying time for a lot of reasons: the emotional pain, worries about your kids, financial stress, etc. Something that many people may not realize, but should pay attention to, is the way that divorce can impact your credit score. When assets are divided during a divorce, most people believe that’s the end of the fight, mistakenly assuming that if the other spouse was ordered to be responsible for a debt then they are free and clear. This is often not the case and can lead to an unsuspecting spouse having a once pristine credit score trashed. To find out more about how divorce can impact your credit score and what to do to prevent that, keep reading.


Down Arrow Charlotte Divorce Lawyer Mecklenburg Family law AttorneyThe first thing to understand is that, as a married person, your financial life is inextricably linked to your partner. Spouses almost always have a joint mortgage or car loan. They likely have joint credit cards or are at least authorized users on the other person’s card. Additionally, even those debts incurred in the name of only one spouse may be treated as a marital debt if the debt was accumulated during the marriage, meaning a husband could be on the hook for a personal loan received by his wife without ever signing anything.


When couples decide to divorce, the hope is that these financial knots are untied as neatly as possible. The problem is that it can often be difficult to do. When a divorce is finalized, the decree will divide not only the marital assets of the couple, but also the debts, explaining which party is responsible for what. This means that the husband may be given responsibility for paying the joint American Express card while the wife pays the Visa.


So what’s the problem with this? Sounds fairly simple, right? The problem is that Visa and American Express are not parties to the divorce, only the husband and wife are. The divorce decree, though binding on the married couple, has no power over the credit card companies (or any lender). Their agreement is contractual and was reached directly with the couple and cannot be changed until the agreement has been amended. Just because the divorce decree says the husband is responsible for the AMEX doesn’t mean that AMEX will remove the wife from the card. Same thing with the Visa; even though the wife is responsible under the terms of the divorce, both the husband and wife are legally responsible for the debt.


What can go wrong is that the Husband (or wife) stops making payments as required under the divorce decree. If hubby stops paying AMEX, the damage won’t be limited to hubby, as AMEX will try and come after the wife, dinging her credit score in the process. Payment history is among the most important factors in a credit score, so taking a hit like this could be a real problem.


So what do you do to avoid the trouble? The best solution would be to have the spouses either pay off all joint debts at the time of divorce and close the accounts or convert them immediately into individual accounts, removing once and for all the other person’s name. However, this may not be doable, either because of the cost or because of a difficult spouse. If that doesn’t work, the next best thing is to ensure you have online access to any joint account that your spouse is responsible for paying. You can check in and guarantee that payments are made and, if they aren’t, you can remind your spouse or, in the worst-case scenario, simply pay it yourself, avoiding the damage to your credit score.


If you find yourself facing a complicated family law matter, then you need the help of experienced family-law attorneys in Charlotte, North Carolina who can help guide you through the often confusing process of divorce. Please contact Arnold & Smith, PLLC today at (704) 370-2828 or find additional resources here.



About the Author

ARNOLD & SMITH LAWMatthew Arnold is a Managing Member of Arnold & Smith, PLLC, where he focuses on the areas of family law, divorce, child custody, child support, alimony and equitable distribution.

Mr. Arnold was raised in Charlotte, where he graduated from Providence Senior High School. He attended Belmont Abbey College, where he graduated cum laude, before attending law school at the University of North Carolina at Chapel Hill on a full academic scholarship.

A certified Family-Law Specialist, Mr. Arnold is admitted to practice in all state and administrative courts in North Carolina, before the United States District Court for the Western District of North Carolina, and before the Fourth Circuit Court of Appeals in Richmond, Virginia.

In his free time, Mr. Arnold enjoys golfing and spending time with his wife and three children.







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