When it comes to financial matters in today’s world your credit score means a great deal. Whether you want to apply for a home loan, a credit card or secure financing for a business opportunity, your credit score can determine how reliable you are to loan money to.
While paying for things on credit is not necessarily the goal of every person it is the reality for most people. How can you protect your credit score during a divorce? After all, won’t all the money being spent on a divorce lawyer and the uncertainty associated with your bills cause you to become a walking financial liability?
The Houston divorce attorneys with the Law Office of Bryan Fagan would answer that question with a decided, “No”, and have advice for you on how to protect your credit score during a divorce.
Closing Accounts when Divorce is Finalized
I realize that we are jumping ahead, but our advice is not coming in sequential order from the beginning to the end of a divorce. Jointly held bank accounts and credit cards were intended by you to be shared between yourself and your spouse. However, the divorce has left you splitting assets and debts and once this is accomplished it becomes time to limit your liability moving forward.
An important thing to note is that in finalizing a divorce, just because your Divorce Decree states that a particular credit card debt is your spouse’s responsibility, that will not stop the creditor from holding you responsible for payments.
This is due to the fact that your name is on the account and you therefore signed an agreement of some sort promising to pay on the account in the event that money is owed. A divorce decree being signed does not void that agreement. After you have requested to be removed from an account always get something in writing to confirm that your name no longer appears on the account.
Since Texas is a community property state, all accounts are technically joint accounts and the debt is shared by spouses no matter whose name is on the account. No matter who has access to an account, make sure to close the account once it is paid in full and the divorce is over. You can then open up a new account in your name only that will be solely your responsibility moving forward.
Request your Credit Score
This can be done from any of the “Big Three” Credit Score companies. Taking out a loan, failing to pay your credit card payment on time or making an investment affects your credit score.
With so many changes going on during a divorce from a financial perspective it is in your best interest to request a copy of your credit score after your divorce concludes in order to know where you stand financially. Some companies have features that allow you to receive an update via email every time your credit score changes.
Another advantage to requesting your credit score is that any accounts or lines of credit that have been opened upon during the marriage can be made known to you. It is unlikely that you will remember every financial act you and your spouse have taken during your marriage but your credit score should reflect all activity in this regard.
Structuring a Divorce Settlement to help your Credit Score
As previously stated, a divorce decree does not void an agreement that you have with a credit to pay a debt. In the event that your spouse is ordered to be fully responsible for paying a debt, it is a good move to take on debt(s) that are in your name only and not ones shared by you and your spouse.
In exchange for taking on debt in your name, you should be able to take on an asset of some sort or a promise from your spouse that he or she will take on similar debt in their name only.
Have mutually shared debts refinanced where possible
In the event that your interest in a piece of real property is “bought out”, it is standard practice for the party remaining in ownership of the property to refinance the home in order to get a loan in their name only.
The spouse whose ownership remains will also sign a Deed of Trust to Secure Assumption. This document literally has one spouse assume the debt on that note (whether or not the property is refinanced).
The other side of the coin on this subject is that you will deed your interest in the property to your spouse so that he or she is able to have title free and clear of any interest that you may still have in the home.
Basically, the person staying in the home gets the title to the home but also takes on the financial responsibility. The person who gets “Bought out” has no additional liability in any real sense and also gets their share in the equity.
Keep in mind future financial goals when negotiating your Final Decree of Divorce
Whether you want to buy another home within five years, go back to school to get a degree, or expand your business, these are all considerations that need to be taken into account when negotiating the terms of your final decree of divorce.
The decisions you may and how you negotiate can affect your ability to turn these goals into reality once your divorce has concluded.
The attorneys with the Law Office of Bryan Fagan: Placing client interests ahead of our own
If you are looking for representation in a divorce look no further than the Houston divorce attorneys with the Law Office of Bryan Fagan. Our attorneys understand that a divorce case has many different components and we treat each aspect of a case with the attention to detail and respect it deserves. In order to learn more about our office and how we can assist you with your Texas Divorce please contact us to set up a free consultation.
If you want to know more about what you can do, CLICK the button below to get your FREE E-book: “16 Steps to Help You Plan & Prepare for Your Texas Divorce”
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Law Office of Bryan Fagan | Houston, Texas Divorce Lawyers
The Law Office of Bryan Fagan routinely handles matters that affect children and families. If you have questions regarding divorce, it's important to speak with one of our Houston, TX Divorce Lawyers right away to protect your rights.
Our divorce lawyers in Houston TX are skilled at listening to your goals during this trying process and developing a strategy to meet those goals. Contact Law Office of Bryan Fagan by calling (281) 810-9760 or submit your contact information in our online form. The Law Office of Bryan Fagan handles Divorce cases in Houston, Texas, Cypress, Klein, Humble, Kingwood, Tomball, The Woodlands, the FM 1960 area, or surrounding areas, including Harris County, Montgomery County, Liberty County, Chambers County, Galveston County, Brazoria County, Fort Bend County and Waller County.