Divorce can have a significant impact on your checking account. There are costs to be incurred that normally would not occur if not for divorce. These include attorney fees, consultant fees and in many cases, custody evaluators, property evaluators and other such experts. Since there is a separation between two people, one of the parties usually has to move out and set up a new household (be it a short-term rental, a room-sharing arrangement, family home etc.).
Whatever the situation is, the fact is that divorce can increase your credit card debt and before you know it, you’ve got yourself quite a hefty “balance owing” and are no longer able to cover the minimum payments, resulting in interest being slammed on your balance and the hope of ever achieving that zero outstanding balance turns dim. It might look bleak but the fact is that this is something that is unavoidable in most cases and the ability to have some credit in such circumstances can help you get back on your feet.
Legal experts offer several pointers that could help women establish credit in their own names. This is especially applicable to women who have not been in the workforce for quite sometime and have usually relied on their husbands for financial support. Now that the relationship no longer exists, they have to come up with strategies to build their own credit.
Some tips on establishing credit include:
- When you’re in the planning stage of the divorce, start to build your credit. Credit card debt is nothing to aspire for but the reality is that life without credit in today’s world is next to impossible.
- Be aware of the monetary value of your possessions. Make sure you know what is in your name, what’s in your husband’s name, what you own jointly etc.
- Consult a Financial Planner since you will have to take several financial decisions as you proceed with the divorce.
- Divide Credit Card Debt between the two of you. Either do it amicably and honestly if you know which cards you’ve used more and vice versa or divide the debt equally.
- Consolidate your debt. This can be done through marketplace loans and is especially useful for women who are going through a divorce and are not financially independent. It can help get them on their feet and such loans generally charge less interest rates than credit cards.
- Don’t close all your credit cards, as having some credit is always good. Try to maintain a zero balance and charge the cards from time to time to remain in good credit standing.
- Cut Down Expenses. This is important even if you are getting child support and alimony.