The effect of divorce on your credit

Today’s blog will feature you as the main character in a hypothetical divorce that you may (or may not) be going through. The purpose of trying to teach you all something through a story is that I understand financial discussions can be hard to follow at times and, at the very least, are not all that interesting. However, this is an important subject matter that I believe you should know something about before entering into a divorce.

Having a divorce attorney who is as good a teacher as an advocate is not usually discussed when you are decided to hire an attorney, either. Hopefully, you will learn something today that will help you move forward with your divorce. If you have questions about credit, divorce, or any subject in family law, please do not hesitate to contact the Law Office of Bryan Fagan, PLLC.

An illustration of the importance of credit in your divorce

Suppose that you and your husband recently got a divorce. Your divorce decree stated that your husband would pay the balances and your four credit card accounts.

You took this to me that he would pay the balances as ordered and took no further action. After all, what more could you do? You signed the divorce decree and moved on with your life. You had your own attorney’s bill to pay and a life to work on after the divorce of your long-time spouse.

We flash forward six months after your divorce to find that your ex-husband still has not paid off these credit card accounts. Now all four creditors have been in touch with you for payment. No problem, you think. You go to your closet and pull out a copy of your Final Decree of Divorce to make 100% sure that the Decree orders your ex-husband to pay those accounts and not you. With confirmation literally in hand, you call the first creditor to tell them that you are no longer on the hook for paying their bill.

Unfortunately, the credit card company has other ideas. Their response to your statement that you are no longer responsible for the bill is to say that their company is not a party to your divorce decree and that your name is on the agreement to pay any debts that have been incurred on the credit card you owned jointly with your ex-spouse. Lo and behold, when you get off the phone with the credit card company, you come to find out that the late charges and missed payments have been piling up on your credit report.

Here you are, supposedly past your divorce yet unable to ultimately move forward with your life as a single adult. You find yourself in an unenviable situation- either pay the debts yourself to save your credit or pay an attorney to go back to the judge and attempt to hold your ex-spouse in contempt of court for failing to pay the debts back as ordered.

Credit- an underappreciated and essential aspect of any Texas divorce

Issues related to credit are not typically at the top of any spouse’s shortlist as they discuss a potential divorce with an attorney.

After having done many, many consultations with potential clients of the Law Office of Bryan Fagan, PLLC, I can say that very few people ever discuss debts/credit unless I first bring it up. There are, of course, issues to be decided in a divorce that is more important than your credit, but it is nonetheless essential in its own right.

Individual Credit Accounts

It is important to remember that in Texas, your spouse’s debts may end up being your debts after your divorce. If your spouse opens up a credit card in his name and takes out obligations that have only benefitted him, is it likely that this debt will be awarded to you in the divorce?

No, not at all. However, debts are divisible by your divorce, and obligations are to be divided in a just and right manner consistent with other circumstances of your case. Therefore, the individual debts of your spouse may appear on your credit report and vice versa.

Suppose you were to open up a credit card in your name only (an individual account). In that case, the benefit for you is that if you are not working outside the home or do not have a considerable income, it could be difficult for you to earn credit on your own without the assistance of your spouse.

On the other hand, if you open up an account in your name only and do not allow your spouse access to that account, only your actions can negatively affect your credit in those circumstances. You bear all the responsibility for paying on that account- which if you are responsible, having a plan and sticking to a budget may be a good thing for you.

Joint Credit Accounts

In your marriage, if you attempt to open up a joint account, a creditor will look at your income, your financial assets, and your credit history- as well as those of your spouse.

In many marriages, one spouse will take the role of the financial nerd, keeping up dutifully with the bills. At the same time, the other is the economic free spirit- earning money and spending it but doing little to chart the family’s financial course. Even if this applies to your family, you are still responsible for the debts incurred on any jointly held credit account that bears your name.

You and your spouse combined are probably a more attractive borrower from a creditor’s perspective than you or your spouse alone. The downside of earning credit from a creditor is that you are now responsible for paying the debt. Take a look at your bank’s lobby or many of the buildings in the financial districts of Houston.

Their building is probably nicer than your home, and their furniture is more excellent than what you have inside your house. My point? These lenders are doing well because of the interest you pay on those loans. Keep that in mind if you are still married and your spouse comes to you with an idea to take out a loan together.

Pay attention to your credit accounts.

If you are already moving towards a divorce, you should pull your credit report and take a look. Joint accounts need to be paid during the divorce, and you should not expect your spouse to do it out of the kindness of their heart.

You may ultimately sign temporary orders that designate a spouse to make payments on the debt, but this may not happen in the early stages of your divorce. You need to ensure with your spouse that those debts continue to be paid even if you are not explicitly ordered to do so. Your credit is at stake, as well as your ability to recover from your divorce financially babbling.

Questions about credit and divorce? Contact the Law Office of Bryan Fagan, PLLC

On behalf of the attorneys with the Law Office of Bryan Fagan, PLLC, I would like to thank you for showing an interest in this topic. Again, your credit may not be a top concern of yours as you head into a divorce, but I can assure you it is essential and will impact your life in tangible ways whether you like it or not. Protecting it before, during, and after a divorce is key to your future success.

If you have questions about anything you’ve read today, please contact the Law Office of Bryan Fagan, PLLC. We offer free of charge consultations six days a week with one of our licensed family law attorneys.


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Other Articles you may be interested in regarding

  1. Credit Accounts and their effect on your divorce
  2. Handling the issue of credit card debt during your divorce
  3. How are Credit Cards Handled in a Texas Divorce?
  4. How credit cards and debts are handled in a Texas Divorce
  5. Debts, Credit Cards and Divorce in Texas
  6. What Happens to Marital Debt During a Texas Divorce?
  7. Know-How Property and Debts are Divided When Preparing for Your Texas Divorce
  8. What Happens to Marital Debt During a Texas Divorce?
  9. Dividing Property in a Texas Divorce – The Just and Right Division
  10. Why is Separate Property Important and How to Keep it Separate in a Texas Divorce?
  11. What Wikipedia Can’t Tell you About Texas Divorce and Marital Property Division
  12. Texas Divorce Property Division Enforcement
  13. Separate Property in a Texas Divorce?
  14. Does it Matter Whose Name is on Title or Deed of Property in a Divorce in Texas?

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 essential to speak with one of our Houston, TX, Divorce Lawyers right away to protect your rights.

Our divorce lawyers in Houston, TX, are skilled at listening to your goals during this trying process and developing a strategy to meet those goals. Contact the 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 Houston, Texas, Cypress, Klein, Humble, Kingwood, Tomball, The Woodlands, 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.

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