Divorce marks the distinct end of one stage of an individual’s life. However, this view does not tell the entire story. The fact of the matter is that with every ending comes a new beginning; a chance to start anew and remodel our lives in the manner of our choosing. Nowhere is this truer that in regard to a spouse’s financial standing after the property division portion of a Texas divorce is complete.
The act of dividing marital property forces spouses to take a full inventory of their current income, assets, and debt. In the harsh light of day, many people find that their finances are not in the order they would like. This is the perfect time to make the changes needed to bring reality into line with one’s goals.
The first step in this process involves securing copies of all three credit reports. Take the time to comb over these reports, looking for information that is inaccurate, out-of-date or otherwise in need of adjustment. While the process of correcting credit information can be tedious, the end result is definitely worthwhile.
While on the subject of credit, those who have recently divorced should take steps to build a solid credit history, or to bolster the foundation that is already in place. Look for credit cards that have favorable terms, and begin to make financially savvy purchases on those accounts. Pay the balances off promptly and give attention to the all-important debt-to-available credit ratio, and watch those scores rise.
Having a solid credit history is an important part of financial stability. For those in Texas who have gone through a recent divorce and property division, there may be no better time to strategize and implement improved financial habits. The end result can be a far more stable financial future in the years ahead.
The role that debt plays within property division
For many in Texas, the division of marital property is one of the most stressful issues within their divorce. Aside from matters involving child custody, property division is among the most difficult and potentially contentious aspects of ending a marriage. Many spouses are not aware that the division of assets is accompanied by the division of debt, as well. The manner in which debt is dealt with during divorce can make a world of difference in the long-term financial standing of both spouses.
Once the decision to divorce has been made, the first thing that spouses should do is to take steps to stop the accumulation of any additional debt. For spouses who have open accounts on which the other party is listed as an authorized user, it is imperative to call the creditor and remove that status at once. For accounts on which both spouses are listed as responsible parties, ask that a freeze or hold be placed on the account so that no additional purchases can be made. These steps ensure that neither spouse runs up new debt during the course of the divorce.
When considering how to handle existing debt, spouses who are concerned about their future credit standing may want to pursue paying off those accounts before the divorce is made final. While doing so can lead to an initial hit to one’s savings, it also ensures that there are no issues down the line in terms of those debts not being repaid. Regardless of which spouse assumes the responsibility for a given debt within the divorce agreement, the creditor can and will pursue both parties if repayment is not made. This can lead to a decreased credit score for both parties, even if only one is supposed to be making payments on the debt.
Many Texas spouses make the mistake of only focusing on the asset side of property division, and neglect to consider how shared debt will be handled. In some cases, simply deciding which party will be responsible for paying certain debts is not enough. Taking action to pay off those accounts before the divorce is made final is often the best possible solution for a credit-conscious individual.