Divorce is a tumultuous time. Your family is no longer the same. Your finances are completely reshuffled causing you to turn to credit cards and other debt. Debt can become a lifeline during a divorce’s uncertainty. Therefore it’s natural to wonder how a divorce can affect your credit score and how you can protect your credit score during an Illinois divorce?
In practical terms, a credit score is akin to an asset, though. A good credit score allows you to access money when you need it at low interest rates. This is what is going to help you buy your next house, your next car or your next meal after your Illinois divorce. So, you need to know that your Illinois credit score will remain intact or even better after your Illinois divorce.
Your credit score is based off the history of your taking out debts and paying them back in a timely manner. So, how your divorce allocates your debts will impact your credit score.
How Does An Illinois Divorce Handle Debt?
All of the debt which a party divorce holds in either their name or in the other spouse’s name will be labelled either “marital” or “non-marital”
For the sake of clarity and efficiency, the Illinois statutes refer to both positive valued property (assets) and negative valued property (debts) as “marital property.”
“”[M]arital property” means all property, including debts and other obligations, acquired by either spouse subsequent to the marriage” 750 ILCS 503(a)
The Illinois statute goes into detail as to what exactly defines marital property.
“For purposes of distribution of property, all property acquired by either spouse after the marriage and before a judgment of dissolution of marriage or declaration of invalidity of marriage is presumed marital property.” 750 ILCS 5/503(b)
An Illinois divorce judge must qualify every single property or debt in the parties’ names and/or possessions as either being marital or non-marital property
“The court shall make specific factual findings as to its classification of assets as marital or non-marital property, values, and other factual findings supporting its property award.” 750 ILCS 5/503(a)
Any non-marital debt will stay with the person who’s name that debt is in after the divorce.
“[T]he court shall assign each spouse’s non-marital property to that spouse.” 750 ILCS 5/503(d)
An Illinois divorce court “shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors.” 750 ILCS 5/503(d)
What Does My Credit Report Look Like After A Division Of Marital Debt?
In the United States, there are three organizations called “national credit bureaus” They are Equifax, Experian and TransUnion. These national credit bureaus collect, update and store credit histories for most United States residents who use credit. While the three national credit bureaus collect the same information, mostly, there are differences. One national credit bureau may have information regarding a credit user that was simply not discovered by the other two national credit bureaus. Or the same information may be weighted differently by the credit bureaus.
The three credit bureaus then issue credit reports and credit scores to credit issuers who pay them for those reports and scores. Of course, the consumers themselves are also entitled to get a free copy of their credit report (once per year).
The one piece of information that the national credit bureaus do not collect is whether you got divorced or not. The credit bureaus will however look to see if the debt in your name is being paid and whether those payments are on time…so that’s what we need to focus on during your divorce.
If a debt is in one spouse’s name, the creditors (who report to the credit bureaus) are not allowed to bother the other spouse.
“No creditor shall…engage in any collection efforts against the other spouse or former spouse, including, but not limited to, informal or formal collection attempts, referral of the claim to a collector or collection agency for collection from the other spouse or former spouse, or making any representation to a credit reporting agency that the other spouse or former spouse is any way liable for payment of the claim.” 750 ILCS 65/15(a)(4)
Paying Debt During An Illinois Divorce
Often in a divorce, parties can just let life go to hell. It’s easy to run up a credit card that you know you’ll only have to pay half of eventually.
But, that’s not the way it usually works in an Illinois divorce.
An Illinois divorce court can order a lot during the pendency of the divorce to keep a family’s finances in order during a divorce. An Illinois divorce court can order “appropriate temporary relief including, in the discretion of the court, ordering the purchase or sale of assets” 750 ILCS 5/501(a)(3)
This includes ordering the timely payment of marital debts during a divorce.
Final Allocation of Debts During a Divorce
An Illinois court will “divide the marital property without regard to marital misconduct in just proportions considering all relevant factors.” 750 ILCS 5/503(d)
One of those factors is “the relevant economic circumstances of each spouse when the division of property is to become effective” 750 ILCS 5/503(d)(2)(5)
A credit score is certainly a “relevant economic circumstance.” So, you can ask your Illinois divorce judge to award you enough cash to pay off your debts.
More typically, the parties will mediate and eliminate all of the marital debt with the marital cash which subsequently eliminates two big issues in the case.
Failing a complete pay-off, some marital debts such as mortgages, cars and credit cards can just be refinanced into one party’s respective name.
If you have no debts tied to your partner, you have no worries in regards to your credit score.
Debts You Carry Together Post-Divorce
Some debts do carry forward in both parties’ names post-divorce. This is almost always because one party cannot refinance the debt and it doesn’t make sense to sell the asset.
Cars for example, are almost always worth less than the actual debt against the car so it would be foolish to sell the debt.
Illinois courts “the relevant economic circumstances of each spouse when the division of property is to become effective, including the desirability of awarding the family home, or the right to live therein for reasonable periods, to the spouse having the primary residence of the children“ 750 ILCS 5/503(d)(2). The party who is awarded the family home is not always able to refinance the house into their name exclusively until they are more established financially.
When a joint debt carries over into the future, post-divorce, there will always be a clause in the divorce as to who will be responsible for paying that debt. That clause will include a requirement that the debt-paying party prove to the other mutually-responsible party that they did, in fact, make a timely payment.
The reason you need to know if your former spouse paid timely on a joint debt is because your creditors and the national credit bureaus do not care whose responsibility it is to pay the debt per your divorce decree.
Your creditors only care about the contract they had with you. And if the debt doesn’t get paid, the creditor reports that failure to pay to the national credit bureau.
The creditor can also take you to collections court and you cannot use your divorce decree as a defense. You can only use your divorce decree to do an “impleader” to include your former spouse in the same lawsuit…which they are probably a part of already if it’s a joint debt.
What really happens is that if you find out your former-spouse-yet-still-co-debtor is not paying your mutual debts on time, you should take them to court on a motion to enforce and hold them in contempt.
Your Illinois judgment for dissolution of marriage will say “this court expressly retains jurisdiction of this cause for the purpose of enforcing all of the terms of this Judgment for Dissolution of Marriage.”
The very same divorce court you got your divorce in, can also be used to enforce the terms of your divorce decree…and they do it a lot faster than a brand new collections court case will.
Additionally, the Illinois statute makes the violating spouse responsible for all attorney’s fees related to enforcement of the court’s orders.
“In every proceeding for the enforcement of an order or judgment when the court finds that the failure to comply with the order or judgment was without compelling cause or justification, the court shall order the party against whom the proceeding is brought to pay promptly the costs and reasonable attorney’s fees of the prevailing party.” 750 ILCS 5/508(b)
Child Support And Your Credit Score
The Illinois statute, as it pertains to divorce and families, does mention credit reports and child support.
“Whenever a court of competent jurisdiction finds that [a child support] obligor either owes an arrearage of more than $10,000, is delinquent in payment of an amount equal to at least 3 months’ support obligation pursuant to an order for support, or fails to pay the child support annual fee for a period of 3 years, the court shall direct the clerk of the court to make information concerning the obligor available to consumer reporting agencies.” 750 ILCS 5/706.3(a)
I’m not sure if the clerk really does report people who owe child support to the credit rating agencies.
I do know that credit rating agencies peruse court orders looking for judgment amounts owed. But this is usually for collection cases not family law cases.
Getting Your Spouse To Pay You Because Of Your Bad Credit Score
The debts and failure to pay debts that stem from a divorce are terrible and usually someone’s fault. That fault is usually easy to identify: he got into this debt and he did not pay that debt.
An Illinois divorce court can order the person that accrued the debt or failed to pay the debt to pay that debt.
The problem is how do you calculate the damages related to the reduction in a credit score? Sadly, I have no idea how you could prove those damages. “In proving damages, the burden is on the plaintiff to establish a reasonable basis for computing damages….quantifying the damage to [someone’s] credit [is not] a matter of simple common sense” Anderson v. Nelsen, 2023 IL App (4th) 220801 (citations and quotations omitted)
Other Ways To Protect Your Credit Score In Your Illinois Divorce
Pull your credit reports from each national credit bureau. They will tell you exactly what your creditors are looking at.
Remove yourself or your spouse from any outstanding debts you share.
Pay off the debts you do share and can’t remove one party’s name from.
Report all errors or disputes to each individual credit bureau.
Calendar a date AFTER your divorce to pull your credit reports again and report any other errors or disputes.
Remember, the credit card companies do not know you got divorced. They just know you used to borrow a lot and you used to pay it all back. If you were the lesser earning party to your divorce, you can still get credit based on your previous credit capacity. So, if your spouse took all the credit cards…or you paid all the credit cards off, be sure to get some additional credit cards with a big limit and make small payments on those cards. This will preserve your pre-divorce credit limits.
Finally, you’ll start dating soon and probably be remarried (everyone gets re-married). Be sure your new partner is not a credit disaster. A simple background check is all that is required to discover liens, judgment and bankruptcies. I bet you wished you did that the first time.