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What affect does divorce have on a person's credit?

Divorce is a time of change. A couple goes from "we" to "me." Along the way, finances, friendships and more need to be unwound. That process can take a toll on a person's financial situation. How can the process affect a Floridian's credit? To learn more, keep reading.

Divorce does not automatically ding a person's credit. But, divorce often does ding one's credit because one or both partners make poor or vindictive choices.

One common way a person's credit takes a hit is when the couple holds a joint account, where one person is responsible for making payments. If that person stops making the payments, both people take the credit hit. To avoid this problem, eliminate joint accounts early in the divorce process.

Another problem is the price tag of a divorce. In a contentious divorce, the number can skyrocket, causing a person to take out a loan, charge up their credit card or to juggle bills, paying some, but not all.

A better way to handle the deluge of divorce expenses is to sell off marital assets during the divorce and to cut back on your lifestyle. Living single is more expensive than living as a couple. As a result, it is best to get used to that fact early.

A third problem is when the other partner does not want to sell off big-ticket marital assets. Take a common issue. The couple had a marital home with a hefty mortgage. As a couple, they could handle the loan payments. But, separate, the person left with the home is drowning under the weight of the mortgage. And, yet, they do not want to sell it. If that happens and the person cannot keep up with the payments, then both people are on the hook. In these cases, it is often best for the person staying in the home to refinance the mortgage, so that they alone are responsible for the payments and the fallout from not making payments.

Divorce is complicated, and there are many unintended consequences, especially financially. As such, it may be wise to consult an expert.

Source: Finance.Yahoo.com, "5 Ways Divorce Affects Your Credit," Paul Sisolak, April 14, 2016

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