Credit and Divorce

Recovering from Harm to Your Credit after a Divorce

As if divorce itself was not traumatic enough, some clients complain that their credit cards have been cancelled or they are receiving calls and letters from collection agencies following a divorce. Some clients even face foreclosure and consider filing for bankruptcy due to damaged credit scores resulting from divorce. The good news is there are ways to recover from the harm to your credit reputation following a divorce.

How can your credit reputation be harmed?

Harm to your credit reputation typically occurs when negative remarks appear on a credit report that causes an individual or business to lose access to credit as a result. Impairment includes an increase in out-of-pocket costs, loss of credit capacity and expectancy. This harm is caused by the actions of an ex-spouse. Financial harm occurs when spousal negligence or willful behavior results in late payments or default on joint credit obligations.

Arguing for Credit Reputation Harm

In order to be successful in arguing harm to your credit reputation, it is crucial that you establish a clear picture of your credit before and after the divorce. The best approach is to offer expert testimony in order to support your analysis of the monetary harm. The good news is that more and more courts are now accepting damage to credit reputations as a special injury. If argued well, credit impairment can be a sizable portion of a party’s damage award following a divorce.

Can credit harm be prevented?

One good preventative measure during a divorce is to require both spouses to either pay off or refinance all marital debts once the divorce is final. This way neither party can take actions that will harm the other party’s credit. It is also a good idea to obtain credit reports at the outset of the case, and then again at the conclusion, in order to provide for accurate comparison.

If you are concerned about your credit or finances being affected by divorce, it is important to get legal advice as soon as possible. If you have questions regarding any type of divorce issue, contact attorney Brad J. Latta online, or by calling (205) 998-5570.

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