The short-term financial effects of separation and divorce are obvious. Spouses must learn to pay their bills with less income and may have to make sacrifices to make ends meet. However, there are long-term effects divorcing couples in New Jersey may not consider as they plan to live their futures apart.
A person’s credit score determines their ability to access credit and how much it will cost if they get it. Although divorce itself doesn’t affect spouses’ credit scores, some things they do before, during and after the divorce can. For example, refinancing the family home to put it in only one spouse’s name could have a dramatic effect on both of their’ credit scores. The one who gets the house in their own name may see their score drop significantly while the other could see an increase when the mortgage is removed from their credit report.
Credit card companies may reduce the credit lines of divorcing spouses after they separate their accounts. This could lead one or both spouses to hit their maximum limits. Reduced credit lines could be especially harmful to the spouse who earned less money. However, a divorced spouse may be able to add child or spousal support to their annual income when they apply for new credit. In many cases, credit card companies won’t separate accounts with outstanding balances. If one spouse doesn’t pay what they agreed to in the divorce, both spouse’s credit scores could drop significantly.
Financial matters during a divorce could affect a client for many years into the future. With the help of an experienced attorney, a person may create a budget they can live by on their own. It’s important for spouses and their attorneys to agree on a settlement that doesn’t harm themselves or their ex-spouse financially. Options like divorce mediation may be able to help a couple resolve their difference so that neither suffers financially after the divorce.