What You Should Do to Protect Your Credit During a Divorce

The rigors of divorce proceedings have a way of messing up money matters. If you're not too careful, it can mess up your credit score. Shared bills can make this very likely. Loans or credit card debts are a potential financial burden for one. One person deciding not to pay can force another to take on a bigger load of debt. This scenario can happen fast in a divorce.

Click here to watch the video on How Do You Protect Your Credit During the Divorce

You need to protect your credit score. Start by knowing and understanding your credit standing. If you have not seen your latest score, get a copy now. Start doing an inventory of your billing statements. Decide which ones to pay. If there are disagreements about who pays what, the court can decide. Try to pay your share of the bills on time. Pay in small partial payments if you have to but pay on time.

Will Divorce Affect Your Credit Score? How?

It can get tough and rough very quickly in a divorce.? You're not only dealing with emotional gambits but financial challenges as well. In all that mess, you start forgetting bills. There are sudden spurts of spending. This sporadic spending can ruin your credit score. A bad credit score brings with it a new set of financial woes. You need to understand how your divorce is going to affect your credit score.

Joint Accounts. Marriage has a way of merging a lot of things in your life. Payments and obligations are a big part of that. When one stops meeting obligations, both of you will be affected.

• Debts are often shared marital obligations.
• One failing to pay means the other carries the burden.
• Closing joint accounts can help save the credit score.

Missed Payments. Your financial condition can become unstable. You experience stress.

• You start forgetting billing schedules.
• Your payments are past due dates.
• You are balancing routine household expenses with legal expenses.

Dividing Debts. You may agree on sharing debts. Here are some reality checks:

• The court has the power to split the debts.
• Even if you did share your debts you will still owe money if your name is on the account.
• You have to determine which debts to pay or choose to close certain accounts.

Spiteful Spending. Divorce can bring out the weirdest and the most vicious in couples. A spiteful spouse can use spending as a form of getting back.

• A spouse can start a discrete campaign of revenge spending.
• Joint accounts become a target of credit card spending.
• Overlooking a sudden surge of spending can get your score in trouble.

New Spending. You're already in the middle of a divorce or starting the process. You will be paying court fees. Lawyers will not come cheap. There will be travel expenses and documents that need to be reproduced.

• There will be new spending because of divorce. Legal fees will add up. Personal expenses driven by changes in your life will also add to that.
• You will have expenses when one of you assumes care of your children.
• You might consider relocation but consider the new cost of travel and transport.
• Come up with an adjusted budget. The new and changing expenses will affect your regular home budget. Make adjustments.?
• Come up with a plan to accommodate new expenses. Belt tightening is in order.
• Adjust your spending habits now to gear up for savings and reallocation.

The stress and process of divorce have an impact on your credit score. Take steps to protect it. A lot of the revelations here will make sense once you look into them. Act fast and be wise about it so you can keep your credit score safe.

In What Ways Can the Court Help Protect Your Credit?

The court is not an expert in finance although it can call upon such expertise. What the court can do is use the mechanisms of the law to help you. It can help you manage payments and spending. Courts can tell both spouses to keep paying their share of obligations. It can make rulings to make managing the finances fair. The court can suggest a plan to make payments in portions small enough to be affordable.

The Court Can Ensure Bills Are Paid. You might be having anxiety about paying bills. The court can help with that.

• Michigan courts can order that bills be paid on time.
• Courts can create a sort of payment plan to make you pay on time in smaller amounts.

The Court Can Stop Extra Spending. As we mentioned, there might be a sudden surge in spending for many reasons. The court can stop unnecessary spending as a form of control.

• The court can make a ruling to block certain spending.
• It can order a status quo.

Institute Monitoring. The court has enough powers to monitor and control certain accounts. It can look into financial activities.

• The court can order regular checks of your credit report to force you to address issues early.
• A judge can order a freeze on certain accounts to prevent new debts.

Long-term Protections. The court can revisit outstanding court orders. They check if all parties are following them. This should provide enough protection over your credit score over time.

The law and the courts have a way of helping you manage your finances. It can aid in protecting your credit score. You still need to apply a certain degree of common sense to do your part of safeguarding credit standing. Talk to a lawyer and find out what they can do for you. They can recommend certain experts to help out.? When in doubt, there's always the law and the court. Understand how to use both to your advantage.

Why Paying After Due Dates Is Better Than Not Paying at All?

Whether you don't pay or you pay past the overdue date, you'll still get a bad credit score. The thing with credit score is it is beyond the realm of getting loans and debts. Certain institutions or even countries view credit scores as a reflection of character. To some, it is a badge of integrity and even a measurement of how responsible you are. So, you will hear people, especially your lawyers and the court, counseling you. Paying past due dates is better. Even paying small installments past due dates is better than avoiding payment altogether.

Credit Impact. The whole point of a credit score is to create some sort of thermometer for your trustworthiness.

• Your payment even in smaller amounts sends a message you can be relied on to be consistent. You can be relied on to keep your obligation.
• A good history of paying behavior. Payment leaves a paper trail of commitment to an obligation. Consistent payment shows a history of committed behavior.

Avoiding Fees. Like any monetary obligation, debts carry interest charges and servicing fees.

• Late payment fees will be due but this is a lesser cost than non-payment.
• The proportion of interest charges is less with consistent payment than with non-payment.

Building Trust. As we said, a credit score is like a mathematical derivation of trust. It measures your trustworthiness in the eyes of institutions.

• Your trustworthiness means something to lenders. In the modern world and highly urbanized places, lenders play an essential role. They have a role in your business and your finances.
• In your professional and business interests, loans will play a big role in your growth. You need your trustworthiness up.

So pay up even if it's late. Find a way to pay even in small amounts. Pay on time regardless of the amount of payment. Ask help from the court if you have to but keep your trustworthiness. It may help you take business opportunities and stay employed.

Can the Court Track Payments You Made?

Court powers are almost unlimited as long as it is within the bounds of the law. It can "order you around" so to speak. This tells you it can order you to do certain things or give them certain documents.

Court Orders. A court can make rulings and issue orders. These orders have specific instructions.

• The court can draw out a payment plan to make sure you pay on time.
• The court can enforce orders and can use agencies or institutions to do its bidding.

Monitoring Accounts. Courts can order people and institutions, they can order those who have your accounts.

• Courts can order regular checks of bank accounts and credit reports.
• A judge can order you to submit statements to show proof of payments.

Appointing a Trustee. Another power of the court is to have somebody manage payments.

• The court can appoint a trustee to oversee payments. Ensure payments are made on time.
• The trustee can manage the accounts of the parties to avoid missing payments.

Acting on Non-compliance. One party may try to undermine court orders by ignoring them. Any of the parties can report such non-compliance.

• The aggrieved party can file a motion to inform the court. Present the non-compliance and trigger penalties.
• The guilty party will held in contempt. The court will impose appropriate penalties.

The court with all its powers can find a way to track payments. It can ensure payments to protect both parties' credit scores. It can issue orders for specific performances. It can compel institutions to provide reports. It can order people to act in its place.

How Does One Protect Credit During a Divorce?

They say you can't avoid taxes. The proportion of divorces each year makes it appear you can't avoid it too like taxes. Since we already said it affects your credit score, might as well learn to deal with it. Learn to shield your credit score in an impending divorce.?

Find a Way to Separate Your Money. Like anything, be conscious about separate and marital property. Start making distinctions in your finances.

• Consider opening a new bank account under your name only.
• Get a separate credit card for yourself.
• Start closing accounts or limiting their use.

Be Conscious of Shared Obligations. Pay shared loans or credit card debts on time. It's a way of protecting your credit score.

• Prepare a list of bills you and your spouse share.
• Decide who pays for what items in the bills during the divorce.
• Find a way to check if payments are made.

Ask the Court for Help. You may not have the confidence to deal with unpaid bills or work with your spouse. It might be time to ask the court for help.

• Request a court order to keep payments on track.
• Get an order requiring both of you to pay bills as usual.

Avoid Making New Debt. The best way to relieve yourself of debt is not to add to it. It seems obvious but you're up against human behavior. Human behavior in a divorce is often devoid of common sense. Here are some obvious courses of action for you:

• Only spend on the most necessary things. Be frugal. Be strategic in your spending.
• Don't use shared accounts to pay for new expenses.

Check Your Credit. The only way to act is to know what you need to act on. So, check your finances.

• Get a copy of your credit report.
• Check missed payments or a surge of expenses.
• Report and deal with mistakes right away.

It doesn't take much to protect your credit score. Do the most obvious courses of action we mentioned here. A lot of common sense will go a long way too. There's less anxiety if you find a way to collaborate to manage expenses. If it's not very telling, you are both in the same boat when it comes to the credit score. You both need it to move on.

How Does Divorce Affect Your Money and Credit?

Divorce can shake up your money and credit. For some, the impact is almost galactic. Imagine the effect of child support and spousal support. Once you've settled that you have to split up finances. These are major life-changing and life-long effects of divorce. Even before all those you worry about in a divorce will come second to the impact it will have on your credit score.?

Joint Accounts. Marriage they say is stronger when you're together. It seems it goes sideways when one files for divorce. Now couples are going the opposite directions at the start of the divorce. Now joint accounts won't be working for you.

• Shared accounts mean both of you are still responsible for a shared debt. Both will be paying.?
• The money issue will escalate when one of you stops paying your share of debts. The other spouse may have to carry the singular burden of paying.
• It seems the only way to shield yourself and your credit score is to close accounts.

New Financial Obligations. The process of separation coming from a divorce creates new or bigger expenses.

• It can mean accepting new bills. It can be coming from a mortgage or a new car loan.
• You start changing payment habits. You're now saddled with new obligations. You start changing your behavior for the new norm. You change your perspective on what you spend on.

Division of Debt. The court will always pursue fairness and equity. The mechanisms behind your debt might make it difficult to split your shared debts.

• The court can decide to split the responsibility for paying debts.
• There might be cases when splitting is not possible. Your name is still in the account.
• The court ensures any split is fair. The court may not guarantee equal shares but it will be equitable to all.

There might be things the court may not be able to control. It can be the action of a spiteful spouse. It can be your spending behavior. Divorce will have a significant and long-term impact on your money. It will no doubt affect your credit score. So, work with what you can control. Talk to your lawyer to leverage what you can control.

Can You Still Fix a Bad Credit Score After a Divorce?

We've explained that credit scores are like the temperature of trust. You're now waiting for the final judgment. You're reflecting on how your new financial situation has trashed your credit score. Can you move on from that? Is there a way to fix a damaged credit score? What do you do now?

Check Your Credit Report. Let's start with knowing where you are. What is your credit standing? Let's start there.

• Get a free report of your credit standing. A free report can be available from the three major credit bureaus. You can get a copy once a year at no cost.
• Check if the data used for ranking your standing is accurate or correct. The score might be based on wrong data or wrong accounts.
• Challenge the data in the report. Challenge the cited error with the credit bureau.

Pay Bills on Time. It should be obvious by now that paying debts is the best solution. An honorable thing to do too. The last time we checked, it worked well with creditors. We are confident it will work with your creditors too.

• There's a calendar in the vicinity of your fridge. Your mobile phone has a calendar. Use it to remind you to pay on time.
• Most payment platforms already have an auto-pay mechanism. Consider automatic payments for regular billings.
• Pay the minimum amounts. Your creditor will understand you might not be able to pay in full. Please pay on time at least.

Keep Old Accounts Open. We mentioned the history of payments. The longer that history the better you look in the long run.

• Keep your old accounts open even if you are not actively using them. It helps your credit score.
• Make small purchases under the account. It keeps that old account active.

Limit New Credit Applications. A good credit score attracts a call for a new application.? Don't suck in by these great marketing ploys.

• Be selective and strategic in your choice. Apply only for the new credit you need.
• Space out your applications. Don't bunch them up in a short period.

Defer to a Professional. At times, good advice is like a gold nugget. It might be expedient to get advice from a credit counselor.

• A professional can help in establishing a plan. A deliberate way to improve your credit.
• Set up some kind of debt management plan for a more long-term management of debt.

A damaged credit score is not yet an apocalyptic finale to your financial condition. There are ways to regain your credit score. You need to be prudent and conscientious. Be deliberate in your decisions to manage your spending. Your divorce ended not your life. You will need that credit score to move on.

Can a Lawyer Help Protect Your Credit During Divorce?

This question we can answer with much confidence. Lawyers can help protect your credit during a divorce. At Goldman & Associates Law Firm we do. There are ways to do it. Much of it would need your collaboration. We can give you advice but it won't work if you don't take them

Legal Advice. As lawyers, we can give you nuggets of wisdom in protecting your credit. We have worked with many clients for quite a long time. It means helping you means facing the challenges of fixing your financial standing.?

• Lawyers can explain your rights and options in the context of financial challenges.
• Lawyers can talk strategy to help you protect your credit score.

Filing Motions. Courts move and act when prodded. We do this by filing motions.

• Your attorney can file status quo motions. These motions help pay your bills on time.
• Your attorney can move to freeze joint accounts. They do this all the time often during the initial phases of the divorce.

Dividing Debts. Like the courts, attorneys aim for fairness.

• An attorney ensures debts are split fairly in your case.
• They can help you close your joint accounts to prevent future issues.

Monitoring Payments. Lawyers can take the role of monitoring payments.

• They can help enforce orders issued by courts.
• They can also report issues of failed payments or non-compliance to orders.

Protecting Your Rights. Lawyers are mainly there for you. Representing your interest.

• They can negotiate with your spouse's lawyer. Protect your financial well-being.
• They can represent you in court proceedings.

For the most part, the role of your lawyer is to protect you. They represent also the intent of the law but they do it mainly to protect your rights. Managing your finances during a divorce won't be perfect. We know that. There's a likelihood you will miss payments. Try to catch up. Partial payments on time are better than none. Keep track of payment. File proof of payments. You may need them later. Be frugal and avoid incurring unnecessary expenses. If you're not the organizing type start being one. Keep files of your credit score and payments. Being organized and consistent in meeting obligations may save your credit score.

Read How Do You Protect Your Credit During the Divorce for the source article.

Subscribe to our YouTube channel today for more advice on Family Law!

Goldman & Associates Law Firm is here to with information about Child Custody and Divorce in the State of Michigan.?

At Goldman & Associates Law Firm there’s always a sympathetic ear ready to listen.

Schedule your complimentary case evaluation with our leading attorneys.?

(248) 590-6600 CALL/TEXT if you need legal assistance.