Your Credit Score and Divorce

It goes without saying that a going through a divorce can be a very stressful experience. Aside from the emotional aspect of divorces, which can take a toll on all parties involved, the financial component can only exacerbate an already unpleasing situation. No matter, if a divorce is amicable and is not meant to be calamitous, there is an interest for both parties to protect and safe-guard their personal financial futures once the divorce has been finalized. However, quite often, individuals who are going through a divorce are somewhat unsure what decisions need to be made in order to secure their financial interests going forward. Maintaining the same standard of living such as good credit and an exemplary credit score are the benchmark of a successful divorce.

According to divorcerate.org, a website that lists statistics from various foundations and organizations, cites that in the United States alone, between 40 to 50 percent of all marriages will end in divorce. The website goes on to estimate that second and third marriages have an even lower success rate, in that more than 60% of those marriages will end in dissolution.

The real challenge in a divorce proceeding is trying to separate the once combined finances of each individual. This is especially important if each person wants to maintain their financial integrity in terms of meeting any current obligations and any future goals. In order to facilitate that process, a new class of financial advisor was born called a Certified Divorce Financial Analyst or CDFA. This financial professional advises his or her client on what would be the best course of action to take during a transitory period like divorce.

Essentially, a CDFA is a Certified Divorce Financial Analyst or certified financial planner. However, in order to assist in provide legal and financial advice to individuals going through a divorce and to have the title CDFA, these persons must obtain additional certification. It is important for all individuals who are going through a divorce to seek some type of financial advisor in order to determine how to minimize any financial damage, such as having to go through credit repair with a spouse you are divorcing. Most experts suggest that a CDFA is most appropriate for couples that have a combined net worth of at least $250,000. Needless to say, there is much more at stake when you are in a higher tax bracket.

Depending on the level of experience a CDFA has, will dictate the fees he or she will assess. Most charge by the hour but you may be able to find a few that charge a fixed rate. As with anything, in order to maximize your dollars, it is best to shop around. Be wary of the CDFA that will handle your case for free because the caveat usually is you must buy some other financial product from them or they may want you to retain their services in the future in some type of advisory capacity. As the old saying goes, you get what you pay for so choose wisely when selecting a CDFA.

Orlando Family Attorney Kenneth Morse located in Orlando Florida, who has been practicing family law in Orlando and Central Florida for over 35 years says modern divorces are more complex today. He attributes his success to the fact that many people are so consumed with the emotional aspect of divorce that they neglect or do not have the focus to deal with the financial issues. He says that divorces are rather complex and it is much more than splitting assets down the middle, especially when there are legal ramifications like taxes at stake.

Noah Rosenfarb, a CDFA and managing director of Freedom Divorce Advisors in New Jersey, advises that an attorney may be necessary during a divorce, especially if both parties are cannot settle their differences amicably and have to go through litigation and the court system but an attorney is primarily skilled and trained to give legal advice, not financial or even tax advice.

The most experienced divorce attorneys will usually agree that all parties directly involved in divorce should assess several key financial areas before entering into any formal divorce proceedings no matter if it is arbitration, collaboration, or litigation. In doing so, both individuals will understand any advantages or even liabilities. This information is vital in helping each person be able to negotiate a favorable settlement.

First check your credit report. This is critically important because it will let you know what your credit score is as well as if there are any outstanding debts that are in your name or perhaps more importantly, if there is anything that you are unaware of. You definitely want to make sure that whatever is in your report is accurate, and if you have good credit, that your good credit will follow you once you leave the marriage. Additionally, you will want to know if your spouse opened any lines of credit in your name that may impact your good credit and your credit score . Failure to do so could make you legally liable for those debts he/she incurred in your name and if the debts are egregious you may have to seek out credit repair options.

Finding out what your credit score is can also alert you to know whether or not your spouse has impacted your credit score adversely so that your good credit has been tarnished and you will have to seek out credit repair . A credit repair service can be a costly and time consuming task that can impede your divorce . You will then see bills begin to mount because most credit repair services assess fees in order to turnaround a poor credit score and get you back on the road to good credit . Credit repair agencies work with creditors in order to either help you budget your finances so that you are able to pay off your creditors or these credit repair agencies will work a deal out so that you only have to pay a percentage of the outstanding debt. If this is joint debt, this is something that both parties have to sign off on in order to validate it.

It goes without saying that if your credit score and good credit is impacted, it will be difficult to maintain your current standard of living once you have officially divorced. Good credit takes years to build and can be destroyed with a few missed payments. This is why finding out your credit score during a divorce is so critical. A poor credit score because of indiscretions that occurred during the marriage can make an already unpleasant situation like a divorce even more unpleasant and in some instances can turn what could have been an amicable divorce proceeding into a something rather painful and grievous. No one wants to start over again with not-so good credit. Of course, good credit can afford newly single individuals the ability to start over without struggling as much. A poor credit score would make it that much more difficult and having to go through credit repair with a person you are divorcing can leave a bad taste in your mouth. Having to spend your new life fixing your credit through credit repair can be unsettling. This is why it is important to look at your credit score before negotiations so your can mitigate things like credit repair due to a poor credit score.

 

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