When couples living in North Carolina divorce, separating finances is often a top priority. In most cases, a couple will work with a mediator or their respective attorneys to divide assets and debts. However, experts usually advise each spouse to closely monitor their credit during and after a divorce, particularly if the couple held certain debts jointly. This is because jointly held debt could affect the credit scores of one or both spouses long after a divorce is been finalized.
Many couples hold debt in common, such as credit card debt, personal or business loans or a mortgage. Ideally, a couple will seek to pay off this debt before getting divorced. However, this is not always possible, and the debt will become a consideration when splitting the couple’s finances. As a result, a divorce agreement will stipulate which spouse is responsible for paying off existing debts. For example, a couple may agree that one spouse will pay off medical bills while the other will assume responsibility for a joint credit card balance.
While both spouses are expected to meet their obligations under a divorce agreement, creditors are not obligated to recognize the financial terms of the divorce. This means that if the spouse who takes responsibility for a debt falls behind, the creditor can pursue the other spouse for payment. That spouse may find that negative information now appears on his or her credit report, causing a credit score drop.
Spouses caught in this situation may benefit from learning more about their rights from a Piedmont Triad divorce blog and by speaking with an experienced family law attorney. The attorney may be able to provide representation for the client and ask the family law court to compel debt repayment.