Property division and credit considerations

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Property division and credit considerations

| Feb 12, 2015 | Property Division |

Pennsylvania couples who are preparing to divorce need to be aware that the property division made or approved by the court will also involve a division of the debts incurred during the marriage. Despite the allocation of a debt to one spouse for repayment, however, creditors may legally still try to enforce payment by the other spouse, as they are not bound by these family court orders.

Jointly held credit cards can pose issues later on down the road for the party who is not ordered to have responsibility for the balance. In the event the other party fails to pay or pays late, their poor payment history can negatively impact the non-responsible party’s credit as well. Creditors may close a joint account at the request of either party, but they are not legally obligated to do so.

Another issue of which people should be aware is the problem of jointly held mortgages on a home. Most mortgage lenders will require the spouse who is receiving the home to refinance it in order to get the other spouse’s name removed from the mortgage. In the event the spouse who will stay in the home is unable to refinance the property alone, the mortgage can tie up the other spouse’s credit, possibly affecting their ability to secure a new mortgage for a property of their own.

People who are going through a divorce should consider the potential credit impacts joint debts and obligations may pose for them after the marital property has been divided. An attorney can facilitate the negotiation of a property division agreement in a manner which helps separate the client’s finances and credit from such entanglements to prevent later problems from occurring.

Source: FindLaw, “Credit and Divorce”, accessed on Feb. 11, 2015

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Avvo Rating 10.0 Superb | Top Attorney Divorce