The Effects of Divorce and their Relationship to Pre-Existing Debts

One problem that tends to affect a substantial number people who get divorce is how pre-existing debts will factor into the overall effects of their divorce. They are of the mistaken opinion that what the judge orders or what they agree to in their settlement will override any legal documents that are in existence. While it would certainly be nice for divorced couples if this were true, the reality is that the court documents have no bearing on each party's legal responsibility to pay off the debts they jointly contracted during their marriage. That doesn't mean your spouse's failure to follow the court's order is not contempt of court, but it will affect your credit if you don't pay.rnAnother place where pre-existing debts factor into the effects of divorce is their relativity to your income to debt ratio. Even if your ex-spouse is paying the bills the court ordered, as long as your name remains on those accounts, they will be part of your debt to income ratio and will affect your ability to borrow money and obtain new credit card accounts. These factors also have an affect on your credit score so may also negativity affect your ability to obtain new credit since you are still legally responsible for those debts. There are a few ways you can get around the problem: • Prior to your divorce advertise that you are not responsible for any debts your spouse contracts. That will leave you responsible only for those debts that were create prior to that date. • Remove your ex-spouse's name from all debts in order to assure they are paid. • Insist your ex-spouse refinance all joint debt for which he/she is responsible into his or her own name thus relinquishing your responsibility.rnThe effects on divorce can be substantial and likewise detrimental to each person's credit. While it is always better to eliminate the risk factors, it is not always possible, especially if your spouse is unemployed or if your credit has already been damaged because of other financial issues. This is one reason it is a good idea to develop the habit of establishing credit in your own name while you are married: the effects of divorce will be less harmful if you have good credit in your own name. This doesn't mean there will not be some creditors that may be concerned with the joint credit as well, but you will have a much better chance of overcoming those obstacles when you have long-standing individual credit as well. rnOn the other side of the sphere pre-existing debts can have a positive effect on your credit standing as well. If you have not established credit on your own and the pre-divorce debts are minimal and paid on time, it can help you establish credit in your own name or obtain an apartment for you and your children. The important thing is to understand how the effects of divorce can affect your credit and what you need to need in order to overcome any of those obstacles.