Two of the most controversial partners in existence are divorce and credit. Unfortunately, they often work hand and hand. As a result, credit problems may go unresolved without the assistance of a third party.
Resistance to financial obligations frequently occurs during divorce, thus leading to future credit problems. The couple can minimize the problems if they seek help in the early stages. However, in a substantial number of post-divorce cases, credit damage may not appear for several months. By then, past-due accounts could already have been sent to collection.
Credit Counseling to Repair Your Credit
Seldom are the money problems in a divorce resolved by the respective divorce attorneys. Most of the issues related to divorce and credit arise after the dissolution decree. When both households struggle to survive on single incomes, a third-party credit counselor may be necessary to help navigate credit issues.
In these situations, a certified credit counselor or other financial expert can assist you in repairing your credit. Their recommendations and ensuing steps may include any of the following:
- Bill consolidation
- Working with creditors to reduce interest and/or payments
- Managing debt
- Consolidating debt
- Debt relief
- Settlement offers
Perhaps your best strategy for avoiding credit and divorce problems is to refinance all loans for which you are responsible in your own name. However, you must complete this step before any accounts become past due. You may have to continue paying those loans until the court decides which accounts become your obligation after your divorce. Many conflicts occur at this point. If your spouse contests the court’s decision, creating a new agreement may be necessary. As a result, your divorce resolution can drag out indefinitely, at a cost of more time and money.
Talk to Your Creditors Before You Become Delinquent
Creditors will often create a plan to reduce your payments and interest. Neither refinancing nor bill consolidation will affect your credit, provided you refinance or consolidate before the loans become delinquent. Unfortunately, even settlements will appear on your credit report. However, you can attach a letter of explanation to your credit report.
Always consider bankruptcy as your very last option. While bankruptcy will relieve you of all financial obligations in under Chapter 7, the information remains as a negative mark in your credit history for up to ten years. Under Chapter 13, it will remain in your credit history for seven years and still negatively affect your credit score.
Negative impact of bankruptcy
The negative impacts of bankruptcy make it very difficult to obtain new credit and may even prevent you from renting an apartment or getting the job you desire. Many employers now routinely run credit checks on prospective employees. For these and other reasons, we recommend you work out your debt solution before it has a chance to damage you credit.
Credit Yogi Can Help
When you need help finding a reputable credit repair company, Credit Yogi is here to help. Our services are always free to you. Call our toll-free phone line 24 hours a day, seven days a week or submit the form on this website. One of our network partners will call you immediately once they receive your inquiry. Our experts operate in more than 30,000 zip codes throughout the country.