It’s no secret that going through a divorce is a costly endeavor, but people often underestimate the danger that it could pose to your credit. The main problem, which many people are unaware of, is that lenders are not required to follow court decrees. These decrees assign the responsibility of paying off loans to one person, however, lenders may choose to ignore this decree and still expect you to make payments on your loan. Assuming that you are no longer responsible for a loan and the obligations that go along with it can lead to missed payments and overall damage to your credit.
Take Care of Finances Early
If you believe that you are headed for divorce, or are already in the process of divorcing your spouse, it is a good idea to prepare your finances before anything else happens. If you have a joint account — it should be split immediately. Mortgages and car loans should be refinanced.
It may be more useful in the long run for you to sell any property that has a high payment attached to it. One person may not be able to shoulder the payments of what used to be a two-party loan. Selling any large property might also take some of the stress out of the divorce proceedings since there will be no large property to argue over when it comes time to divide your belongings.