When it comes to today’s financial landscape, your credit score holds significant importance. Your credit score reflects your reliability as a borrower. This is especially true when you’re applying for a home loan, a credit card, or seeking business financing. While not everyone relies on credit, it’s a reality for most. But how can you protect your credit score during a divorce? Does trust deed affect credit score?
The Law Office of Bryan Fagan attorneys have advice to help you safeguard your credit during this challenging time.
Closing Accounts after Finalizing Your Divorce
Jointly held bank accounts and credit cards are intended to be shared between spouses. However, divorce necessitates asset and debt division, and once that’s settled, it’s time to limit your liability.
It’s crucial to note that finalizing your divorce won’t necessarily absolve you of financial obligations on jointly held accounts. Even if your Divorce Decree assigns a particular credit card debt to your spouse, the creditor may still hold you responsible for payments.
That’s because your name remains on the account, and you’ve agreed to be responsible for any debts incurred. The divorce decree doesn’t nullify that agreement. After requesting removal from an account, always ensure you receive written confirmation of your removal.
In Texas, a community property state, all accounts are technically joint, and debts are shared, regardless of the account holder. Once a shared account is paid off and your divorce concludes, close it and open a new account in your name only, ensuring it’s solely your responsibility.
Request Your Credit Score
You can obtain your credit score from any of the “Big Three” credit score companies. Taking out loans, missing credit card payments, or making investments all impact your credit score.
With various financial changes during a divorce, it’s wise to request a copy of your credit score after the divorce to assess your financial standing. Some companies offer email updates whenever your credit score changes.
Another advantage of checking your credit score is discovering any accounts or lines of credit opened during your marriage. It’s unlikely you’ll remember every financial transaction during your marriage, but your credit score should reflect all relevant activity.
Structuring a Divorce Settlement to Protect Your Credit Score
A divorce decree doesn’t negate your agreement with creditors to pay debts. If your spouse is ordered to assume responsibility for specific debts, consider taking on debts in your name only in exchange for assets or assurances from your spouse to manage debts exclusively in their name.
Does Trust Deed Affect Credit Score?
A trust deed can have an impact on your credit score in the context of a divorce. When spouses have joint debts secured by a trust deed, both parties are typically equally responsible for the debt. If one spouse is awarded the property and the associated debt in the divorce decree, it doesn’t automatically remove your financial liability.
If the spouse responsible for the debt fails to make payments, it can negatively affect both spouses’ credit scores. To protect your credit, it’s essential to ensure that the trust deed is refinanced. Otherwise, ensure there’s a clear plan to transfer the debt and responsibility to the spouse who will retain the property.
Does trust deed affect credit score? Absolutely. So, remember that clear communication, legal agreements, and proactive steps are vital to minimize the potential impact on your credit score during divorce proceedings involving trust deeds.
Refinance Joint Debts Where Possible
When one spouse is “bought out” of their interest in a property, it’s common for the remaining owner to refinance the home to secure a loan in their name alone. The departing spouse usually signs a Deed of Trust to Secure Assumption, allowing them to assume financial responsibility for the property.
Consider your future financial goals when negotiating your final divorce decree. Whether you plan to buy another home, pursue education, or expand your business, these goals should influence your negotiation decisions to ensure they remain achievable post-divorce.
At the Law Office of Bryan Fagan, PLLC, we prioritize our clients’ interests above all else. Our Houston divorce attorneys possess the experience and understanding to navigate the various components of divorce cases, addressing each aspect with the attention and respect it deserves. To learn more about our services and how we can assist you with your Texas divorce, contact us for a free consultation.
If you want to know more about what you can do, CLICK the button below to get your FREE E-book: “16 Steps to Help You Plan & Prepare for Your Texas Divorce”
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Law Office of Bryan Fagan, PLLC | Houston, Texas Divorce Lawyers
The Law Office of Bryan Fagan, PLLC routinely handles matters that affect children and families. If you have questions regarding divorce, it’s important to speak with one of our Houston, TX Divorce Lawyers right away to protect your rights.
A divorce lawyer in Spring TX is skilled at listening to your goals during this trying process and developing a strategy to meet those goals. Contact Law Office of Bryan Fagan, PLLC by calling (281) 810-9760 or submit your contact information in our online form. The Law Office of Bryan Fagan, PLLC handles Divorce cases in Spring, Texas, Cypress, Spring, Klein, Humble, Kingwood, Tomball, The Woodlands, Houston, the FM 1960 area, or surrounding areas, including Harris County, Montgomery County, Liberty County, Chambers County, Galveston County, Brazoria County, Fort Bend County and Waller County.
Bryan Fagan, a native of Atascocita, Texas, is a dedicated family law attorney inspired by John Grisham’s “The Pelican Brief.” He is the first lawyer in his family, which includes two adopted brothers. Bryan’s commitment to family is personal and professional; he cared for his grandmother with Alzheimer’s while completing his degree and attended the South Texas College of Law at night.
Married with three children, Bryan’s personal experiences enrich his understanding of family dynamics, which is central to his legal practice. He specializes in family law, offering innovative and efficient legal services. A certified member of the College of the State Bar of Texas, Bryan is part of an elite group of legal professionals committed to ongoing education and high-level expertise.
His legal practice covers divorce, custody disputes, property disputes, adoption, paternity, and mediation. Bryan is also experienced in drafting marital property agreements. He leads a team dedicated to complex family law cases and protecting families from false CPS allegations.
Based in Houston, Bryan is active in the Houston Family Law Sector of the Houston Bar Association and various family law groups in Texas. His deep understanding of family values and his professional dedication make him a compassionate advocate for families navigating Texas family law.