David R. Bruegel, P.C.David R. Bruegel, P.C. brandDavid R. Bruegel, P.C.
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Avoid credit surprises after divorce

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Many Michigan couples may not fully understand the impact a divorce can have on their credit and payment responsibilities. What happens to debt after marriage is determined mostly by property division and what is written in the divorce decree, but the divorce agreement may not always be enough. People may need to be proactive in separating themselves from certain debts or making more specific requests in the divorce agreement.

The problems occur primarily because creditors are not parties to a divorce decree. That means that their ability to collect on the debts is not determined by the divorce agreement. They are still legally able to come after anyone whose name is listed on the account. In most cases, both spouses' names are listed on debt. These names are not removed after the divorce unless that request is made specifically to the creditor. This becomes a serious problem for many former spouses who assume they are no longer responsible for debts handed to their partner after the divorce. People's credit scores can be negatively impacted even by debt they were not responsible for paying according to the divorce agreement.

There are some steps people can take to protect themselves from credit problems after divorce. Joint accounts are the ones both people will be responsible for. A request must be made by either spouse to change or close the accounts. In most cases, the accounts must be closed and reopened. If they are loans, then they may need to be refinanced.

Since the typical asset division process does not address this problem, it is important that people in a high net worth divorce bring it up with their attorney specifically. An attorney can often help clients take the necessary steps to protect themselves and their credit.

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