In a high net worth divorce, there is a good chance that you’ll have considerable assets to split, but you may also have a lot of debt. When you’re trying to work through everything to end the marriage, you must remember that the decisions you make now can have a big impact on your future.
One thing that you may not have thought about is how the divorce will impact your credit. On its own, the end of your marriage won’t play a role in your credit score. But, there are some factors that could play a role due to the split that you should understand..
Part of your credit score has to do with your debt-to-income ratio. When you go through a divorce, your income drops because you don’t have your spouse’s income any longer. At the same time, there is very little chance that the debt will go down.
There are two ways that debts are handled during the divorce. One of these is to sell off marital assets and use the proceeds to pay off debts. The other is that the debts will be split between you and your ex. The court will issue an order about who pays what.
Because the divorce is a civil matter in which the creditors aren’t involved, they don’t have to follow the court order. This means they can hold both spouses liable for the debts that are jointly owned. If your ex doesn’t pay the ones they’re supposed to, your credit report can suffer because of the missed payments.
It’s best to think about all the ways the divorce might impact your financial standing, including your credit worthiness. This can help you to work out terms that you can live with, and it may help you to plan for your new life as a single person.