Pile of credit cards during post-divorce planning.

According to the U.S. Department of Health and Human Services, young couples who bring debt into marriages face some of the most challenging relationship issues. However, credit issues can also cause serious problems after divorce – and some spouses may be particularly concerned about the potential effects on their credit scores. Managing credit is an important priority for all South Carolina residents – whether they are married or not. That being said, divorce creates unique challenges when it comes to credit, and it may help to review these issues alongside an experienced divorce lawyer in South Carolina. Contact the experienced and dedicated South Carolina divorce attorneys at King Law Offices today at (888) 748-KING to learn more about how you can manage your credit after your divorce. 

Spouses Share Debt Post-Divorce – Just Like Property

Many spouses know that during divorce, they must divide all marital property according to the rules of equitable distribution in South Carolina. A lesser-known fact is that spouses must also divide all debt accumulated during the marriage via the same system. To gain a better understanding of what might happen to debt during post-divorce years, it is important to review the equitable distribution process. Under this doctrine, debts fall into two potential categories:

Separate Property

Some debt is separate property, and this debt is not subject to division. In other words, spouses are wholly liable for their own separate debt – and their exes will not have to pay these debts. Spouses may incur this type of debt before they sign their marriage contracts – or after their dates of separation. For example, a spouse might obtain a business loan a year before their marriage. They might also rack up considerable credit card debt after moving out of the family home during divorce. Both of these debts are “separate property,” and they are not shared. 

Marital Property

Debts may also become marital property, and these debts are perhaps most concerning for spouses today. Even if one spouse incurred this debt without the consent or knowledge of the other spouse, both become liable for the outstanding sum during post-divorce years. For example, a spouse may end their marriage with considerable credit card debt. Even if the other spouse only finds out about this debt after the divorce filing, the court may still force them to pay 50% of the bill. This can come as quite a shock to some spouses, and a meeting with our legal team at King Law Offices may provide insights while alleviating concerns. 

Strive for Financial Independence to Manage Credit Post-Divorce

Financial independence is an important step for spouses going through divorce in South Carolina. The sooner a spouse achieves financial independence, the sooner they can begin effectively managing – and rebuilding – their credit. A smart first step may be to end any joint, shared accounts. From there, a spouse might open a new account in their own name. The same logic applies to credit cards, and any joint lines of credit should be severed immediately after the date of separation. Once spouses cut off their joint credit cards, they can re-apply for new credit cards as individuals. 

Although it might take a few months or years to achieve their pre-divorce levels, spouses can begin rebuilding their credit scores almost immediately post-divorce. This could be more important than many spouses realize, especially if they plan to secure a loan for a new home purchase in the near future. Note that courts may “freeze” joint accounts during the divorce process, and it may be impossible to close these accounts until after the divorce is over. Even if spouses cannot close these accounts, they can still open new accounts in their own name.

Address Debts Through Mediation

Like many other aspects of divorce, mediation during equitable distribution can be a positive, cost-effective strategy when addressing the issue of debt. During these private discussions, spouses may want to negotiate a clear payment plan for their outstanding marital debts without going to court. Not only does this reduce legal fees, but it may also keep potentially embarrassing financial details from the public eye. These negotiations can occur in tandem with other mediated discussions about the family home, child custody, alimony, and so on. 

Spouses may mutually agree that it is not appropriate for both parties to pay debts primarily accumulated by one person during the marriage. On the other hand, a spouse might not be willing to take on all of this marital debt – even if they were wholly responsible for it. Experienced divorce lawyers in South Carolina can help spouses navigate these challenging discussions, and they can help draft payment plans that serve the best interests of all parties. 

Prepare for a New Financial Reality

Spouses should think carefully about their financial future post-divorce. Their previous standard of living may not be possible, and attempting to recreate previous luxuries could prove disastrous. If a spouse became dependent on the income of their partner during the marriage, they may need to downsize to a smaller residence, cut down on frivolous expenses, and avoid going into debt at all costs.

According to a study published by the National Institutes of Health, men are more vulnerable to the short-term financial effects of divorce. However, statistics show that men tend to recover at a faster pace – with many ultimately reaching a greater standard of living compared to their married years. On the other hand, numerous studies have established that women encounter more serious post-divorce financial burdens than men, with many eventually slipping into poverty. This highlights the need to effectively manage credit post-divorce. 

Learn More About Your Legal and Financial Rights by Contacting King Law Offices Today 

King Law Offices have spent years assisting divorcing spouses in South Carolina. Post-divorce concerns over credit scores, debts, and mortgages are common, and you can address these issues in various ways. While internet research may represent a positive first step, the path toward financial security depends entirely on the unique circumstances of each spouse. During a consultation with King Law Offices, you may have the opportunity to discuss these circumstances in more detail. Call (888) 748-KING today to continue this discussion.

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