Divorce and Your Credit Score

Divorce and Your Credit Score

Divorce and your Credit Score

Divorce Ring (Photo credit: Jewellery Monthly)

Divorce and your credit score is a subject that is shrouded in myth.  When your life is being torn apart you are probably not thinking about financial realities in the clear eyed and businesslike way that you should.  Hopefully you are well represented by an experienced attorney.  Regardless of the pain and emotional turmoil you are going through you need to keep certain basic principles in mind.  First and foremost remember that your creditors are not a party to the proceeding.  Your divorce judgment has no effect on your legal contracts with third  party creditors.  Late payment on joint accounts have the same effect on both parties regardless of whether the default was malicious or not.

Divorce and Your Credit Score with Shared Accounts

The only really safe course of action is to divest yourself of shared accounts as soon as possible, preferably before the final judgment is entered.

  • Your home:  Sell or refinance the home in the name of the party who is buying out the other.  This should be done before the final judgment if possible.  In the real world this is frequently difficult or maybe even impossible.  If need be the party holding the property can be held responsible through severe penalties in the divorce judgment for failure to make even a single timely payment.  This can be coupled with monitoring rights.  Penalties and monitoring rights exert a strong deterrence where it’s most needed.
  • Joint car payments  Automobile debt is usually the second largest debt that married couples have together.  Sell the car.  If one buys the other out they should agree to re-finance it in their own name when possible.  If this is not possible, at the very least the party taking possession should have strong incentives to put this obligation on the front burner.  Stiff penalties can be built into the judgment or separation agreement for even a single late payment.
  • Joint credit cards:  Paying off your half or whatever percentage you agree to is not the end of it.  You must close out your end of this if the creditor consents.  Otherwise insist on closing the account.  Penalties for default are not going to work here because this obligation will go on into eternity if you don’t take care of it now.  Even high balances here can affect your debt to credit ratio and your individual credit score without late payments.

It is well known that financial pressure is a major factor in the average divorce. Many couples find it unromantic to talk in a hard headed way about finances when they first become engaged.  Once divorce is in the works the heart no longer can be permitted to get in the way of the cleanest break possible for everyone’s sake

 

 

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After practicing law for 37 years Edward F. St. Onge, Sr. now devotes all his time to helping consumers achieve a high credit score with amazing speed. Learn the counter-intuitive secrets to credit scoring through his down to earth instructions backed by extensive knowledge of the laws and trends. All of the latest tricks and techniques that they don't want you to know now at your disposal. At last a level playing field for the consumer!

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