What To Do When Divorce Messes Up Your Good Credit Card Rating
‘TIL DEATH DO US PART
What To Do When Divorce Messes Up Your Good Credit Card Rating
Copyright © 2005 Money and Credit Information
Divorce can be really ugly, but it could get uglier if it threatens to ruin your credit card rating. Imagine having to go through the emotional trauma of having to part with someone you have vowed to be with for life, as well as having to deal with accounting for the purpose of liquidating the conjugal properties. Then, when all is said and done, and you spouse, or ex-spouse rather, have gone to live his or her own separate life, you’ll realize that he or she has left a mountain of debt with high interests on all the purchases that were made from the credit card that is under your name!
If you find yourself in a situation like this, don’t feel lonely. Experts have seen a 20 percent rise in bankruptcy filings, and it is estimated that a large part of this is due to divorce.
Fortunately, if you find yourself in this situation, there are several options available for you.
1. You could file for bankruptcy, as statistics show that many people are, but you should know that if you choose this option, the bad mark will stay on your credit report for ten years.
2. Another option would be to simply make the payments. But many people, after experiencing a divorce, find that living on one income is a difficult adjustment after a divorce, and are forced to only make the minimum payments. That can make for a lot of debt. For example, if you had a debt of $50,000 at an average interest rate of 18%, it would be sixty-four years before you paid it off! You would be paying for those memories for a very long time.
3. The other option is to seek professional help. There are several non-profit organizations that specialize in credit resolution, and many people seek this type of help following a divorce. Here’s how it works. For a small fee of around $14.00 per month they will analyze your credit card debt, living expenses and income in order to determine what type of repayment structure would best work for you. Then they contact your creditors and work with them regarding interest rates, late fees, and payment amounts. The credit card companies, who understand that divorce is one of the leading causes for bankruptcy, usually don’t have a problem working with the credit repair company. After all, they want their money!
Although, the non-profit agencies do not report credit counseling to credit bureaus, most credit card companies do. You may look at this as a negative, but many people don’t. Credit counseling can be explained a lot more easily than bankruptcy, which is often a deal stopper for someone trying to buy a home, or even purchase a car.
While in credit counseling, you would not be allowed to retain a credit card. But this could be a blessing in disguise as it would allow you to save up and spend on necessary expenses only. Slowly, but surely, you will be able to remove chunks from the debt that piled up, and eventually regain your financial freedom.
Now wouldn’t that be nice, considering what you had to go through with the messy divorce proceedings?
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January 18th, 2007 at 1:06 am
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