A lot of women are unaware of the fact that their divorce decree has no provision to protect their finances and credit.
I am Monika Ecsedy Nagy, a divorced single mom and a Certified Credit Analyst. I have seen a lot of women who lost their good credit in the divorce proceedings and are bereft of any idea on how to protect themselves. It is surprising that how could women end up broke post divorce, even after the court orders, where their obligations stands divided and the ex-husband has the responsibility for the payment of their joint accounts and other house payments? But it is a fact that tens and thousands of women are facing this reality every passing day. For whatever reason, the divorce attorneys, who are hired for thousands of dollars to ensure their protection, are not informing their clients that they are not at all offering a full-proof protection. There is basically a high probability for these women ending up with a ruined credit or bankruptcy. We woman basically need to seek a good divorce attorney who is actually acquainted with the law of divorce, so that even the original obligation and the contractual agreement with the original creditor are maintained and we and our kids receive real protection. So, it is a common question for a lot of women, ‘what do I basically need to know?’ Well, your first task is to ask your attorney to make arrangements with your spouse so that the joint accounts are paid off prior to finalizing your divorce. This can be achieved in different ways:
1. Credit Cards – do not cancel them; transfer the credit history to your new one. a. Ask your spouse to open a new card and move all his obligations onto that account. You can also open a new card with the same credit agency, but be smart to stay put with the old card’s credit history. Sometimes credit card companies will let you transfer your old card’s credit history onto your new card. This can help you tremendously to achieve a good credit score.
b. If your spouse doesn’t have the credit score to achieve that, ask him to borrow from friends and family in order to pay that obligation. You must NEVER agree to simply put it in the divorce decree, for that will not protect you or your credit from creditors.
c. No money at all? Go to file bankruptcy along with your spouse and make sure ALL the accounts are included. Don’t trust your ex to put your accounts in. I have seen a lot of credit reports where the spouse only included the joint account and not his ex-wife’s accounts. Save yourself and check the bankruptcy papers before you file.
2. Car loans - find low interest rate loans This is a time to check your car loans. Go to your local credit union and check their programs .Many of them have lower interest rates than Banks and other financial institutions. Finance the car under your name. Do not ever accept only the judges’ order that he has to pay for it. After your divorce is finalized, remember that you are at his mercy.
3. House payment- ways to get out of it Unfortunately if you have to sell your house, refinance it under your name. Alternatively ask your spouse to pay it off. It doesn’t matter even if the judge says that your ex has to pay the mortgage, for the Bank will foreclose on you no matter what. So, if your husband is supposed to pay for the house, make sure that you receive the full payments from the other assets as well and pay it off or get rid of it.
Many divorce cases continue for years and they have a very unpleasant legal site to it. A lot of attorneys are making a great living as they fight for every penny in a divorce. Make sure that your attorney fights for your credit too. These days, your credit is considered to be your most important report card. Not only your credit cards, mortgage and car loan depends on it but your insurance and your ability to find a job. Be smart and know your rights.
4. Check your credit-make sure all changes are made Next step is that you need to make sure that your credit stays good. For this you are required to check on it periodically: The best place for it is myfico. com. Their monitoring system emails you regarding every change. You also need to make sure that prior to the finalization of the divorce, all your spouse’s balances are transferred to his account. If you happen to be an authorized user, you need to take yourself off his accounts. But I would be a bit selective on this point.
As an authorized user you can gain points from him using his account responsibly and you are not responsible for the balance. Be smart and do not take off yourself from the account if he is responsible, but if the account is maxed out, you should. There is a very delicate balance working here, which is a bit difficult to explain. It often takes me 3-4 hours to analyze a credit report to find out which maxed out account is still beneficial to you as an authorized user and which isn’t. You have to make sure you end up with credit in the end. Many women have ALL their accounts joint or they are authorized user and they end up with no credit.
5. Separate joint accounts Make sure all joint accounts are separated. My book “Give yourself the credit you deserve” ( Click here), offers a lot of advice on how to keep your credit score upwardly mobile. One of the advices is to keep your old history and transfer it to your new account. A long account history can mean 10- 50 points on an account. 50 points of a difference can save you hundreds of dollars on your insurance, car loan or credit card payments.
6. Monitor frequently Keep an eye on new accounts. I have noticed many spouses out of revenge open new joint accounts and max them out. If you monitor your credit you can let the credit card company know you never applied. If they do not react send us an email, we specialize on those accounts and put together the appropriate paperwork to make those accounts disappear from your credit.
7. Do not talk to collection companies. Get back to the original creditor. Make sure the bill is in your name and not your ex-husband’s name. You will be surprised to know that a whole lot of people end up with collections which are not theirs.
The end of a marriage is a dramatic emotional and financial event. You need to handle it as a business transaction. You need to seek out for your and your children’s interest. Optimizing your credit and establishing the best score possible is nonetheless vital for your recovery and survival.
These are just few of my advices. Keeping a good credit score is essential and requires the knowledge of the available factors of the FICO algorithm .you need to be proactive and educate yourself or you may also search for well known professionals who will provide you with necessary help. If you have any questions please contact me at monika@financialfuturecoach.com .