Credit is a funny thing. Two generations ago our grandparents had a mortgage on their home- a home that cost around $10,000 most likely. One generation ago our parents started using a credit card for emergencies and big purchases. Nowadays you and I probably have five or six credit cards combined and think nothing of it. Has our need for credit gone up that exponentially in just a few decades? No, but our need to keep up with the Jones and the stigma of credit having long since faded have both contributed to the rise of credit.
A lot of people think that it takes money to make money. Or that the little guy can’t get ahead without some help from Visa. Home mortgages are a necessity given the skyrocketing prices associated with real estate. No matter what position you take when it comes to the use of credit the fact is that if you check your credit report there are likely a number of accounts open where you are paying interest for good and bad decisions that you have made in your life. This isn’t a judgment, but it is an observation that you should take seriously as you begin to plan for a divorce.
Your financial life is not going to improve during your divorce. You will be paying for an attorney and paying for the costs associated with maintaining an active divorce case on the docket in the county where you reside. Progress doesn’t come cheaply, as you will soon learn. While your life after divorce can be an improvement from your current life you first have figure out how to get there.
Being intentional about your divorce is the only way to make it out better than you were when you got in. At the end of the Super Bowl, no player on the winning team has ever asked himself how he got there. Winning the Super Bowl is an intentional act that takes years of preparation and hard work. Divorce is no different. Work hard and prepare the path for a successful divorce to travel down. How you can do this with your credit will be today’s blog post topic from the Law Office of Bryan Fagan, PLLC.
Credit explained in the context of a divorce in Texas
As we discussed at the outset of today’s blog post, credit is an integral part of most people’s financial lives. Whether you borrowed money to purchase your home, financed an expensive medical procedure with a credit card or helped your child pay for college by taking out a student loan, debt is looked at as being unavoidable in our world today.
Credit, at its best, is a tool that you can use to soften the edges of your life and to accomplish things that you otherwise would not be able to. As a married person this was true and now that you are planning on how to transition into singlehood you will need to plan for credit to be a part of your life. That is, of course, unless you swear off debt completely. You can pay your debts off by working hard, budgeting and focusing on your goals. This is the toughest road to go down and is probably the last thing you will want to do after going through a tough divorce. However, if it interests you I bet you can hop online and find a person or two that has a proven method for eliminating debt and building wealth.
Back on subject, if you can use debt as a tool to give yourself some wiggle room and build financial stability then more power to you. Left uncontrolled debt is a means to a bad end. Like a horror movie where the ending is visible to everyone but the poor sap on screen. Don’t be that poor sap. Read on and plan ahead for success in your real-life movie.
Immediate steps to take during and after your divorce
Start off by requesting a copy of your credit report. This is smart for a number of reasons but I will key on a couple right now. First of all, you need to see if your spouse has opened up any credit accounts in your name without your permission. Second, you will need to know exactly how much debt is held in your name so you can negotiate with all of the information available to you. Third, if you know how much debt is held in your name you can have a good idea about how much debt you will be responsible for paying when your divorce is completed. Odds are any debt held solely in your name will be yours to take on (other than the mortgage).
Next, you should open up your own bank account separate from your spouse. This will allow you to start to deposit your own paychecks in there and to differentiate your finances from your spouse. Importantly you do not want your spouse to have electronic access to your checking or savings accounts. Yes, there is likely a standing order in place for the duration of your divorce that bars him or her from accessing your information but it is easier to just remove any possibility of there being malfeasance on their part.
The last tip I would give in this area is to change beneficiaries on wills and life insurance policies. Suppose the worst happens- you divorce your spouse and then a week later you pass away suddenly. Instead of your children, your family or a charity receiving whatever wealth you have accumulated in life it could go to your ex-spouse because you didn’t change your beneficiary designations in time. That would be an all time frustrating event to be sure. Do what it takes to ensure this doesn’t happen. If your standing orders don’t allow for you to do this during the divorce, stop by your estate planning attorney’s office to get your will and other documents changed as soon as you are officially divorced.
Your credit examined in detail
It is easy to lose sight of very important topics in a divorce and credit is just the type of subject that can get swept under the rug beneath immediate concerns related to money, your spouse and your children. You may not feel like you have time to worry about your credit or other long term issues associated with credit but I can assure you that the future version of you will not be happy with the present version of you if you are not able to be proactive about protecting your credit.
Keep track of your bills and make sure everything is being paid on time and in full during your divorce. The temporary orders phase of your case will center around this subject. If you were the spouse who did not handle your bills or the finances in general this is all going to be a shock to your system. You will be under more stress to get everything right. However, some stresses are good and this is one of them. The lessons you learn now about handling yourself and your finances will last with you for a long time to come.
In tomorrow’s blog post from the Law Office of Bryan Fagan, PLLC we will continue to discuss the topic of credit by engaging in a full fledged and detailed discussion on this subject. Protecting your credit and beginning to establish a play for developing a relationship with credit as a single person will be our focus.
Questions about divorce and finances? Contact the Law Office of Bryan Fagan, PLLC today
If you have questions about the role that credit, your finances and money play in a divorce please do not hesitate to contact the Law Office of Bryan Fagan, PLLC today. We offer free of charge consultations six days a week with our licensed family law attorneys. It would be an honor to meet with you to discuss your questions, goals and concerns as you head into a divorce. We represent clients across southeast Texas and do so with pride.