Archive for the ‘Divorce Finances’ Category

Repairing Your Credit Score after a Divorce

March 24th, 2015 at 6:20 pm

credit score, divorce finances, Chicago Family Law AttorneysA divorce can certainly take a toll on a person emotionally, but it can also wreak havoc on a person’s finances. For instance, your household income may be going from two people working to just a single income. It is also often the case, especially in contentious breakups, that one spouse refuses to pay their share of the bills while the divorce is ongoing. This can result not only in your bank account taking a hit, but your credit score may also be greatly affected. Even in a “friendly” divorce, many people find their credit rating has taken a nose dive. Financial advisors say there are steps you can take which will help repair and rebuild your credit after divorce.

When it comes to repairing your credit after a divorce, the first step one should take is finding out exactly where their credit score stands. This can be done by pulling credit reports from each of the three major credit bureaus. Federal law entitles you to receive a free report every year. Carefully examine the reports to find any and all accounts that are in your name, either solely or jointly. Unfortunately, it is not uncommon for one spouse to take out credit cards in their spouse’s name without their knowledge – especially in a troubled marriage –  and these accounts can have a negative effect on one’s credit score.

Close out accounts held jointly with your ex-spouse, and open accounts in your name only. The closing of accounts may cause your credit score to dip initially, but it will go back up again once you begin reestablishing credit in your name alone. You should also contact your current credit card companies and let them know you are now divorced. Inquire whether or not they will issue you a new credit card account in your name only. It is also important to have your name removed from accounts where you are listed as an authorized user.

When it comes to paying bills which are in your name alone, as you are trying to rebuild your credit, financial advisors recommend that you prioritize payment of your bills in the following order:

  1. Mortgage, car loans, and other installment loan debts and credit cards;
  2. Rental payments for apartment or house; and
  3. Utilities.

For bills which are still in both your name and your ex-spouse’s name, the priority should be:

  1. Payment for the vehicle you use;
  2. Mortgage or rent for the place where you live;
  3. Utilities; and
  4. Installment loans and credit cards.

During the divorce process, it is important to keep your attorney informed of any issues that surface regarding martial finances as you are going through the divorce. If your spouse is supposed to pay a share of the bills and refuses, your attorney will know what legal options you have – such as requesting a hearing where the court can order your spouse to make the payments.

If you are considering a divorce, contact an experienced Chicago divorce attorney to discuss your case.  Anderson & Associates, P.C. has offices in Schaumburg, Wheaton, Northbrook, Orland Park and downtown Chicago.