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How will divorce affect credit?

When a Minnesota couple divorces, financial issues are often at the forefront. A spouse may have strong feelings about how marital property should be divided, as well as about issues of spousal support and child support. But couples also need to think about how their joint debts will be handled once the divorce is final, and how the divorce will affect each spouse's ability to apply for credit.

A divorce decree can establish financial obligations between the parties to the divorce. It generally cannot, however, change the contracts the couple entered into with banks, credit card companies and mortgage lenders. After a divorce, creditors can continue to hold each spouse liable for joint debts.

The divorce decree can require that one spouse be responsible for paying off a debt the couple incurred jointly. But if that spouse fails to pay the debt, the creditor can still come after the second spouse for payment. The second spouse can seek a court order compelling the first spouse to repay him or her. The court can also hold the spouse who failed to pay in contempt for violating the court order.

A spouse going through a divorce may want to get copies of both spouse's credit reports at the beginning of the divorce process. While the divorce is proceeding, it's important to stay current on all bills, even if it means paying a bill normally paid by the other spouse. The divorce decree should contain detailed information about debt obligations, including account numbers, balances and who is responsible for paying each debt.

Addressing debt issues is a critical aspect of any divorce proceeding. It is important for each spouse to be aware of their legal obligations and their rights as they disentangle themselves financially from each other.

Source: University of Minnesota Extension, "Credit Issues with Divorce," accessed Jan. 5, 2016

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