Divorce is a difficult process that impacts people at the psychological level, in their
relationships with children, and financially. As we know, finances are usually an issue when it comes to divorce, and credit management is one of those important tasks that people don’t pay enough attention to.
In South Carolina, divorce of property is regulated by particular state codes that affect the distribution of marital property.
The state subscribes to what is known as the ‘equitable distribution’ system, which is a system that divides property acquired during marriage fairly, but not necessarily 50-50, depending on several factors. These laws also apply to the apportionment of debts which may include credit card accounts, loans, and mortgages among others.
It is important to know how these laws work for you and how you can shield your credit during this period.
It does not matter if you are planning to purchase a car, a home, or even lease an apartment you will need your credit score. It is therefore important to take some measures in handling your credits during this period so that your financial security is well protected after the divorce.
Understanding the Financial Implications of Divorce in South Carolina
It’s important, when ending a marriage in South Carolina, to be aware of how the legal system in the state will affect the division of property and debts and, consequently, one’s financial situation.
Marital Property Division
South Carolina operates under equitable distribution where marital assets and liabilities are divided fairly but not necessarily fifty-fifty.
The court is required to look at the factors that will enable it to split the property fairly including the duration of the marriage, the income and earning capacity of each spouse, the contributions made by each spouse to the marriage, and the needs of each spouse after the divorce.
Equitable distribution also includes and extends to real and personal properties that include but are not limited to real estate, automobiles, and other properties as well as liabilities such as credit card debts and loans.
If both spouses are responsible for a particular loan or credit, the court will determine how the amount is divided, although this does not affect the terms of the loan or credit.
This implies that the creditors may still pursue the two parties to pay the debt even when one of them has been deemed to be responsible for the payment of the debt in the divorce ruling. Knowledge of this law is important to safeguard one’s credit since any delinquencies will be reported to the credit bureau irrespective of a court ruling.
Alimony and Support Payments
The amount of alimony and support payments shall be determined by the court by the provisions of Section 20-3-10 of the South Carolina Code of Laws.
Perhaps the most important financial factor in South Carolina divorce is alimony or spousal support.
Under section § 20-3-10, the court can grant alimony to one of the spouses depending on the duration of the marriage, the standard of living that was set by the couple during marriage, and the financial capability of each of the spouses.
Alimony can also be made as periodical payments or a one-time payment depending on the circumstances of the marriage. Such payments can be critical or ruinous for one or both of the parties involved in the case.
To the paying former spouse, alimony is a recurring financial responsibility that has to be paid with a lot of consideration so as not to impact his/her credit. If alimony is not paid, there may be legal repercussions and this can mean having wages docked or having liens placed on one’s property and this will affect one’s credit rating.
Impact on Credit
Divorce does impact your credit score, mostly through the payment of debts that were incurred jointly, accounts that were jointly held, and alimony and/or child support orders.
Shared Debts and Joint Accounts
In marriage, people share credit accounts or debts for instance through the opening of accounts for purchasing cars, houses, and credit cards. These joint liabilities of marriage can then become sources of credit trouble after divorce if not managed appropriately.
It means that even if the court decides that one of the spouses is liable for a particular debt, both partners’ names can still be on the account. If there are any delays in the payments or if the account gets into a state of default, the credit score of both partners will be affected.
Court-Ordered Payments
Other legal costs such as child support that is awarded by the court also affect credit as does alimony. Failure to honor these obligations or paying them at the wrong time can make you have a bad credit rating, have legal proceedings taken against you, or have your wages garnished.
One should ensure that he or she comprehensively understands the obligations in as much as the finances are concerned as provided by the divorce decree and how to meet those obligations as provided by the divorce decree.
Credit Score Implications
The division of properties, distribution of liabilities, and dealing with accounts payable make the post-separation period a sensitive period when it comes to credit scores.
If you get familiar with the financial consequences of the divorce laws of South Carolina and learn how to protect your credit, you will not be a victim of your divorce.
Steps to Protect and Rebuild Your Credit During Divorce
It is important to stay on top of your credit and work to rebuild it if you’re going through a divorce. Here’s how you can navigate this process effectively
Close or Separate Joint Accounts
The first thing that should be done during the process of divorce, is to freeze or cancel all the accounts that are opened by you and your spouse jointly. Combined credit such as credit cards, loans, or even bank accounts are very risky to your credit rating if not well managed.
Steps to Close or Separate Joint Accounts
Closing or separating joint accounts is a crucial step in protecting your credit during a divorce. Joint accounts can leave you vulnerable to your spouse’s financial decisions, making it essential to manage these accounts properly.
By taking proactive steps to close or separate joint accounts, you can prevent future credit damage and ensure that your financial independence is secure.
Inventory All Joint Accounts
The first step involves preparing a list of all the accounts that are held jointly these may include credit cards, mortgages, auto loans, and any other financial obligation that may be incurred.
Contact Creditors
Contact the creditors or the lenders for each account and explain to them about the pending divorce and hence the closure or the separation of the accounts. Inquire about the procedure for deleting a member’s name, or changing the account to a single-user one.
Pay Off and Close Accounts
If possible, one should clear the balances and cut off the accounts. This ensures that one cannot be charged or miss any payment in the future hence affecting their credit status.
Refinance or Transfer Balances
Mortgages or car loans, for example, should be refinanced in one spouse’s name or transferred to a separate account. This may mean a new credit check so it is wise to make sure that your credit rating is good before proceeding.
Get Confirmation in Writing: After closing or separation of the account, it is necessary to ask the creditor for a written statement that there are no further debts.
Monitor Your Credit Regularly
This is why, after a divorce and during it, you should check your credit reports frequently. This helps you monitor any changes and know when to expect some problems before they occur.
Importance of Monitoring Credit Reports
The evaluation of the credit reports from the three credit bureaus Equifax, Experian, and TransUnion enables one to identify errors such as inaccurate account information, double listing, and fraudulent activities.
Track Changes
Regular checking of your credit score will enable you to notice any change that may be occasioned by the changes in your financial status during divorce. It can also notify you of any new accounts or inquiries that you never approved.
Resolve Discrepancies Quickly
If you come across any problem or inconsistency, then it should be resolved quickly. There are cases where the information provided by the credit bureau is incorrect, and the best thing to do is to contact the credit bureau to challenge the information provided and provide any supporting documents.
Negotiate Debt Responsibility
In particular, when splitting assets during a divorce, it is crucial to establish who will be paying off the debts incurred during the marriage and that this be outlined in the divorce papers.
Tips for Negotiating Debt Responsibility
List all the joint obligations and identify who is responsible for any of them.
Consider Each Spouse’s Financial Situation.
The amount each spouse is to be held responsible for should be based on each spouse’s earning capacity. If one partner earns more or has better financial status, it would be reasonable if he or she has more debts.
Document in the Divorce Decree
Make sure that the debt allocation is spelled out and agreed to in the divorce papers. This legal document must identify who is liable for every debt and how it is going to be dealt with.
Protect Yourself In as much as the court has allocated a debt to your spouse, the creditors may still come after you if your name is on the account.
To avoid such a situation, it is best to negotiate to get debts refinanced or transferred to the defendant’s name only.
Seek Legal Advice If there are issues or controversies or special circumstances or conditions of the couple involving finances, it is wise to consult a divorce lawyer for legal advice to protect the interests of the party who is filing for the divorce.
Consider a Credit Freeze
Thus, in some situations, the credit freeze can be a good strategy to use to shield your credit during the divorce process.
A credit freeze is a process through which an individual restricts usage of his credit report for a certain period
.
A credit freeze or a security freeze is a measure that puts a freeze on your credit report, thus limiting the access identity thieves can get to open accounts in your name. It can be especially helpful during divorce if there are issues with unauthorized use of the credit card or identity theft.
How a Credit Freeze Can Protect Your Credit
When you freeze credit, nobody, not even your spouse, can open credit accounts in your credit report without your consent.
Reduce the Risk of Fraud
It is argued that during a divorce, personal information can be more easily misused as compared to other relationships.
A credit freeze is an added security measure.
Control Over Your Credit
A credit freeze allows you to remain in charge of your credit report and can be lifted for a specific time if you have to apply for credit yourself.
How to Implement a Credit Freeze
Implementing a credit freeze is a powerful step to protect your financial security, especially during significant life changes like a divorce. A credit freeze restricts access to your credit report, preventing unauthorized individuals from opening new accounts in your name.
This added layer of protection can help safeguard your credit while you focus on navigating the complexities of divorce.
Contact Each Credit Bureau
One thing to note is that the credit freeze can only be done separately from each of the three major credit bureaus.
Provide Necessary Information
Be prepared to give your details and identification documents to support your claim.
Receive a PIN
Every bureau will provide a PIN or password through which you will have to temporarily thaw the freeze, if necessary.
Monitor Other Accounts
However, even with a credit freeze, you can still have other new accounts opened in your name and it is recommended that other accounts you have should be checked occasionally for signs of fraud.
Post-Divorce Financial Planning in SC
In as much as one moves on after a divorce, it is important that proper handling of the finances is done so that the future is secured.
Some of the steps that can be followed during post-divorce financial planning include; budgeting, credit creation or rebuilding, and credit counseling if required. Here’s how to approach each of these steps.
Create a Budget
Developing a budget is perhaps one of the most crucial things that a person has to do to overcome the financial crisis that comes with a divorce.
A budget is a plan of how the money will be used and is important because, with changes in income and expenses, one can know his or her financial status and ability to meet financial commitments as well as save and invest.
Importance of Creating a Post-Divorce Budget
Creating a budget after a divorce is a crucial step in regaining financial stability and control. Divorce often brings significant changes to your financial situation, from shifts in income to new expenses.
A well-planned budget helps you navigate these changes, ensuring that you can meet your financial obligations, protect your credit, and work towards your future goals. Understanding the importance of a post-divorce budget sets the foundation for a more secure and independent financial life.
Adjust to New Financial Realities
Divorce leads to alteration of the income and expenditure of the particular family in question. A budget helps you to respond to them effectively because it gives a clear understanding of your current financial position.
Prioritize Essential Expenses
A budget will enable one to meet the most important needs like home rent, water, electricity, food, and other basic needs and transportation.
This makes sure that there is adequacy in the necessities that are fundamental before seeing what is left for the rest.
Manage Debt and Protect Credit
With the help of a budget that shows all your income and expenses, it will be easier to manage debts, control the time of payments, and thus, save your credit rating.
Set Financial Goals
Whether it is to start an emergency fund, save for retirement, or save for a future purchase, a budget enables you to plan and achieve your financial goals.
Avoid Financial Stress
A budget provides a roadmap on how to spend money and thus there is less worry or anxiety on how to pay bills or where the money will come from.
Legal and Financial Support Options in SC
Managing the financial and legal issues of divorce is best done with the help of professionals who will look out for your best interests and your future. Here are some key options to consider
Consult a Financial Planner
Cooperating with a financial advisor, who understands the legislation of South Carolina on divorce, is crucial for the financial aspect of the divorce process and the period after it. A financial advisor can help you.
Develop a Post-Divorce Financial Plan
They can help in the preparation of a financial plan, the administration of property, and the financial planning for your future as provided under the laws of South Carolina on equitable distribution.
Understand Tax Implications
Tax implications of divorce. It is always helpful to consult a financial advisor in these changes to make sure that the changes taken do not violate tax laws and that the tax situation is the best it can be.
Manage Retirement and Investment Accounts
If you own retirement accounts or investments that require division, a financial advisor can assist you in this process so that your financial future is safe.
Utilize Local Resources
South Carolina offers various local resources that can provide additional financial and legal support during a divorce.
South Carolina Legal Services
This organization offers pro-bono legal services to qualifying low-income households, which can include divorce and finances.
SC Bar Lawyer Referral Service
The South Carolina Bar provides a referral service that can help you find a divorce attorney of your choice in the state.
Local Nonprofits and Community Centers
Most community organizations provide services such as financial planning, counseling, and educational sessions on how to deal with finances at the time of divorce and thereafter.
Credit Counseling Agencies
Local credit counseling agencies can help with debt and credit repair and provide specific advice for people who are going through a divorce.
How Our South Carolina Divorce Attorneys Can Help You
Navigating the complexities of divorce requires experienced legal support to protect your rights and financial interests. Our divorce attorneys are committed to providing personalized, compassionate guidance throughout every step of the process. Here’s how we can help you:
Protecting Your Financial Interests
Divorce often involves the division of assets and debts, which can significantly impact your financial future.
Advocate for Equitable Distribution
We’ll ensure that assets and debts are divided fairly according to South Carolina’s equitable distribution and family laws, protecting your financial stability.
Negotiate Favorable Terms
Whether it’s alimony, child support, or the division of property, we work to secure terms that are in your best interest.
Safeguard Your Credit
We’ll advise you on steps to protect your credit, such as separating joint accounts and ensuring that debt responsibilities are documented in the divorce decree.
Promoting the Credit Rights of Your Credit
Divorce can be financially devastating and credit score is one of the areas that can be severely affected. It is therefore important to shield your credit during, and after, a divorce to determine your financial future.
Our law firm has been dedicated to protecting the credit rights of your company in every phase of the divorce.
If you’re navigating a divorce and need expert guidance to protect your credit and financial interests, contact Max Hyde Law Firm at (864) 804-6330 today to book a free consultation with one of our experienced divorce attorneys.
