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5 Tips to Keeping Good Credit in Your Divorce

You finally decide to proceed with a divorce case. It was not an easy decision to make but it was one that, over time became clear was necessary for the Wellness of you and your family. While many issues we're holding you back from initially filing for divorce you've decided to push forward and begin the divorce process. While you may have many questions about how your case will proceed and what the outcome is going to be you also feel confident that you are making the right decision for yourself and your children.

It is normal to have a range of concerns at a time like this. Going through a divorce means that the entirety of your life is going to be upended and changed at least temporarily. This considers issues related to your marriage, your children, and your finances in a host of other important subjects. In today's blog post from the Law Office of Bryan Fagan, we are going to discuss the subject of your finances and how a divorce can upend a lifetime's worth of planning, saving, and diligence.

Specifically, I am interested in sharing with you some tips to help you maintain strong credit both during and after your divorce. Without question, a divorce can be equal parts expensive, tedious, and time-consuming. However, anyone who tells you that your finances will necessarily be ruined because of filing for divorce is either trying to purposely mislead you or is exaggerating based on their own negative experience. Certainly, your credit can be during the worst case. However, that is not the experience that you have to have period rather, you can plan and see to it that who are finances are in good shape after a divorce, especially regarding maintaining a strong credit rating as well as keeping your credit history clean.

Why is it important to have strong credit? 

Before we go any further, I wanted to share with you my thoughts on why it's important to have strong credit after divorce comes to an end. The idea of being creditworthy can have a strong credit history is a subject that has become especially important over the past few generations. While our grandparents may have had credit cards and things of this nature, very rarely did they engage with debt as frequently as our generation or our parents’ generation. As a result, making sure that you have a strong credit history and maintain your creditworthiness after a divorce is very important.

For one, one of the interesting developments regarding your credit over the past few years is that many employers will look at your credit score before offering you a job or considering you for employment. In my opinion, this is due in part because employers are interested in knowing that you can take care of yourself and make good decisions. While it may not be fair to make a judgment completely based on your credit history being able to make good decisions financially is indeed a good sign that you are capable of making good decisions in other areas of your life. Employers will oftentimes run credit searches on potential employees to make these sorts of determinations. A low credit score will often rule you out of consideration in certain jobs. Think of it as the ability to gain security clearance for certain government jobs.

Next, having a good credit history is important to be able to do something as simple as renting an apartment. For many corporate-owned apartments, a simple credit search will be run by the leasing office before they determine whether they can lease an apartment to you. The irony of this is that people with no credit history but a strong history of paying their bills on time oftentimes cannot rent that apartment in certain situations. As such, if you want to ensure that you can raise an apartment without question and you should consider the importance of your credit history and credit score. Many times, people in your position will be moving from a family home after a divorce. If you don't want to spend a great deal of time looking for housing after your divorce, then maintaining a strong credit score is important. 

Next, maintaining a good credit score is important so that you can purchase a new home after your divorce. In most cases, people do not stay in the family home after divorce comes to an end. This is due in no small reason to the fact that your mortgage is likely based on the income and credit histories of you and your spouse. As a result, having a single income would likely not allow you to purchase the same house again. However, if you are interested in remaining in the family house you will likely be asked to refinance the loan as a part of the conditions of your divorce. At the very least, you will likely be asked to show your spouse and their attorney that you can pay for the mortgage on your own.

Finally, having a strong credit history after your divorce gives you options as far as starting fresh as a single individual. For instance, if you would like to start your own business then your ability to access lines of credit in other lending opportunities is important. Having strong credit after a divorce is key to this equation. If you must destroy your credit for some reason during your divorce, then you close off certain options when it comes to your post-divorce life. Maintaining a strong credit history and credit score allows you to gain access to lending options for opening a business, improving your own home, or engaging in several different pursuits that require financing.

these are just a few of the ways that I think it is important for you to keep a strong credit history and credit rating after your divorce. With that said, let's walk through five ways that I think you can maintain good credit even during a divorce.

Develop and stick to a budget

A well-thought-out budget can help you to learn where your money goes. This sounds simple but how many of us at one time or another have wondered where our money went at the end of each month? A budget tells your money where to go instead of wondering where it all went. When you have a budget that means you can spend your time planning rather than searching for answers regarding where your money went. This is especially important during a hectic time in your life like a divorce. It is easy to lose track of your finances and simply become sloppy with your spending during a divorce. Having a fatalist attitude that a divorce was going to cost a lot of money anyways and that it was not important for you to keep track of how you spend your money is not a position that you should take. Rather, if you have never developed a budget of any sort now is a great time for you to start this great habit. A typical divorce can last approximately six months. This is the perfect length of time for you to troubleshoot your budget and begin to dial in on your costs. At first, you may notice that your budget is way off in several different areas of your life. For example, in my personal life, I have found that my wife and I spend more on groceries each month than we would have thought at the beginning of our budgeting experience. 

Over time, you will become more accurate in your budgeting and that will help you to figure out where your money is going each month a budget does not have to be complicated or completed. A simple excel spreadsheet or even a yellow legal pad showing the money coming into your bank account each week and the money that goes out can show you a great deal about what your spending habits are and what your priorities are. Once you figure out where your money is going you can have a much firmer grasp on how to take control of your finances. When you have control over your finances you will not be left wondering how you manage to borrow so much money or how you became overextended from a financial standpoint. These are all factors that can help you maintain a good credit history.

Choose your attorney wisely

When it comes to costs associated with your divorce, the most expensive trust will likely be regarding your hiring an attorney. I don't tell you this to try to dissuade you from hiring a lawyer. Rather, I think it is certainly in your best interest to consider hiring an attorney to represent you in your divorce case. You can think of it as a short-term investment into your and your family's long-term future. However, that does not negate the fact that hiring an attorney is a relatively expensive process. This is especially true if you do not choose your attorney wisely.

You should interview as many attorneys as you can to determine which lawyer is right for you. You should make decisions based on the qualities possessed by the attorney including their work ethic, results for clients, ability to connect with you on a personal level and most importantly they are diligence and teaching you about the law period from there, can make educated decisions for your family and feel more confident about moving forward in several different areas for your case. 

It is not wise simply to hire the first attorney who comes across your radar. This is true even if your spouse has already filed for divorce and you are scrambling to find representation. In most situations, it can be argued that you are better off attending an initial hearing without an attorney and simply asking the judge for more time so you can hire a lawyer. It is not guaranteed that the judge will grant your request, but it is better to do this than to hire an attorney who is not right for you if only to have representation at the initial hearing. Rather, this should be a decision that you do not rush into.

Work hard during the divorce

A lot of clients and people that I've run into in my time as a practicing family law attorney will take the perspective that a divorce case is a situation where they have earned the right to be able to sulk or generally not work all that hard in their career during this time. These folks will argue that their attention is being diverted by the case. On many levels, this is understandable. However, it is also undeniably true that being able to afford a divorce depends a great deal on your income. Those whose incomes are greater have more wiggle room and more of an ability to afford a divorce and the costs that come along with it. 

With this said, working a side job or taking on additional hours during a divorce is a great idea if that is something that you can manage. This does not necessarily have to be employment that you intend to keep after the divorce. Rather, you can intend to proceed with these additional forms of employment if only to afford temporarily the costs associated with the divorce such as hiring an attorney. Working these types of jobs is not necessarily have to go into the calculation of your net monthly income, either. So, increasing your income temporarily does not mean that your child support will be increased by a like percentage or amount.

Negotiate intentionally

By the end of a long and difficult divorce, many of you will simply be satisfied just to get the case done and over with. I cannot emphasize how important it is for you to not focus on the finish line and to neglect the important details of your case. You should talk to your attorney in advance about your goals so that the attorney can help you to determine the best course to achieve those goals. When it comes to your finances, this oftentimes will involve paying attention to the details when it comes to dividing Community property such as your family home, bank accounts, and retirement. Inflecting the details of your divorce simply to get the case over with is not a noble ambition. Rather, negotiating to the bitter end of your case with an eye on the details and your post-divorce life is prudent. This is especially true if you have a family or children.

If you do not negotiate well and with a purpose in mind you can very easily lose track of your finances and be put in a position where you come out of the divorce having to borrow money just to pay your bills. Borrowing money can be a sign of creditworthiness but it can also become a problem if you cannot afford to pay your bills. As a result, you should pay close attention to how you negotiate your case from a financial perspective. Do not discount the small details and how they may ultimately play a big role in your maintaining strong credit even after your divorce case comes to an end.

Determine if creditworthiness is a worthy goal for you

The last tip I have for you regarding keeping strong credit after a divorce is to simply determine whether maintaining a strong credit score is in your best interest as an individual. I understand that our culture places a great deal of emphasis and importance on having a high credit score. However, remember that ultimately would a high credit score does is it allows you to borrow money at more favorable rates. The result of that is that you can borrow more and more money. The process goes on and on until you may find that you are in a loop of always being able to pay money to borrow more money which leads you to pay more money to borrow money and so forth. For many people, this is a great goal to have. However, you should look at your own life and determine whether or not maintaining a strong credit score is important to you. If it isn't, you can make it a goal to pay down and eventually pay off all debt after the divorce and get yourself on a cash-only system for your post-divorce life. In the long run, this may be what is best for you and your family.

Questions about the material contained in today's blog post? Contact the Law Office of Bryan Fagan 

If you have any questions about the material contained in today's blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free of charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law as well as about how your family circumstances may be impacted by the filing of a divorce or child custody case.

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