Keep Your Divorce from Wrecking Your Credit Score
While going through a divorce can be an overwhelming time, it’s important to plan for the future and leave yourself in decent financial condition after a split. Often, parties to a divorce experience a major dip in their credit, either due to their own actions or those of their spouse. In order to move forward in building a new life on your own, you will need a robust credit score for major purchases or even to successfully rent a new apartment. Be aware of the following ways that divorcing spouses may do damage to their credit, and try to avoid the following pitfalls for divorcees’ credit scores.
- They took on too much debt: When you’re dividing your assets and debts between yourself and your spouse, you might want to hold onto certain debts just to make sure they get paid, or because you’re attached to your car or house. Make sure you don’t bite off more than you can afford to chew on your new single-income budget, however, and consider the value to be gained from selling and downgrading, or allowing your ex to keep an expensive asset on which you still owe money.
- They lived off their credit cards during the divorce: Divorces are expensive, there are no two ways about it. The attorneys’ fees, court costs, and expenses associated with moving out and stocking a new household add up very quickly. During a divorce, some people go into auto-pilot and charge up whatever they need on their credit cards without thinking about their budget, at times making unnecessary purchases while emotional over the divorce. Although it’s hard to adjust to new constraints on your budget, it is important not to spend money you don’t have, leaving yourself with lots of new debt when the divorce is final. Try to cut all but the most important expenses, and consider asking a family member for a low-interest loan if you need help getting by during your divorce, rather than accruing high-interest credit card debt.
- Their ex didn’t make payments on accounts or assets in both spouses’ names: Certain assets or accounts, such as cars, credit cards, or houses, may become one spouse’s property in a division of assets, while still carrying both spouse’s names for a time. Despite the fact that it also has a negative impact on the non-paying spouse’s credit, some parties to a divorce stop paying these debts either out of necessity or a desire to exact revenge on their former spouse. In order to stop the harm that this can do before it gets out of control, make sure you obtain a monthly statement for any account on which your name is still listed to ensure that they stay current on payments, and be sure to have your name removed from any assets which are intended to become permanently your ex’s property.
If you have found yourself with a large amount of debt and need help determining which steps to take next, contact the skilled and knowledgeable Germantown consumer law and bankruptcy law firm Haeger Law for a consultation at 888-463-3520.