Divorce 101 for your Finances, Credit, and Outstanding Mortgage ...
This is a great blog about how a divorce affects your credit and finances! Gene outlines the steps to take to set things back on track and what to do with all of your common debts and property.
Divorce can be devastating. With U.S. divorce rates hovering right around 49%, it's obvious that divorce and its far-reaching consequences touch many lives.
Add the present housing crisis into the upheaval experienced during divorce and you find many Americans presently experiencing a great need for accurate financial and legal guidance. While going through a divorce is probably the worst time to expect anyone to make sound financial decisions. Yet, that is exactly when the demand for these decisions are being made.
Certain precautions and actions should be taken during and immediately after divorce proceedings to protect yourself ... both financially and credit-wise. Otherwise you may find yourself having to do major credit-repair afterwards, just when you hope to move-on with your life.
Here are some major points to be considered, discussed, and then acted upon when divorcing, especially should you own a home with a soon-to-be ex-spouse:
- EVERY credit account you have MUST be addressed in some manner within the divorce settlement.
- Leave nothing to chance. If accounts and credit are still held jointly during the divorce process, make sure timely, consistent payments are being made.
- Keep records showing proof of your credit payments. Ask that your spouse be required to do the same.
- Be aware that creditors cannot close an account simply because you're divorcing. But they CAN close an account that is held jointly if asked to do so. That means your spouse can make that request. The creditor can then require you to apply for new credit as an individual ... based on your individual financial status.
- Have that discussion about the marital home. Will it be sold? Who would stay in the home? Can one spouse buy out the other?
- Remember: Should there be an outstanding debt on the marital home, the residing-spouse must refinance the loan to their name only, should the exiting spouse wish to be totally relinquished from the remaining debt.
- If the decision is made that one spouse will remain in the marital home, a Quit-Claim Deed must be prepared. This Deed then transfers the title and rights to the property to the remaining spouse.
- All creditors must be advised in writing of the removal of a spouse on an account. Only then will the Credit Report reflect a change.
- Seek your own legal counsel prior to taking any action.
- Consult with a professional mortgage lender before you list your marital home or before buying another property. Also remember that they are typically a great resource for credit reports and credit guidance during rough times.
- After all divorce proceedings are through, re-check your credit to make sure all requests and changes are reflected on your report. Do not assume that all has been correctly implemented.
During the stressful and disquieting times of divorce, it is vital that you protect your finances and your financial interests. That includes your credit scores. Seek-out the guidance and service that you so sorely need at this time. You will be glad that you made that effort and sought that path.
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