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Divorce - Repairing/Improving Credit Creates Options

Separating married couples have several larger assets such as homes, retirement accounts and businesses to be divided.  These assets may be divided in a Rhode Island Divorce based upon the factors listed in the equitable distribution statute. However, parties debt more difficult to resolve.  Because of the slow real estate market, many Rhode Island couples face tough choices centered on their homes.  Do they try to sell the home in a slow market or does one party "buy-out" the other?  Can either party refinance the current debt?  Can either get a mortgage loan to buy a new home?  My work, as either a Rhode Island Divorce Mediator or Rhode Island Divorce Attorney is made easier when parties have borrowing choices available.

Maintaining and rebuilding your credit is an important step.  According to Susan Tompor,the first step is to obtain your credit report and a credit score.  This helps discover credit issues and helps determine if you can obtain a mortgage loan. 

Paying bills on time only counts for 35% of your credit score; another 30% of the score is based on the amount of money that you owe. Try to throw extra money at credit card debt before car mortgages, since credit cards carry higher interest rates.  Only use a small percentage of your available credit on any card.  Closing credit card accounts with large available credit can reduce your credit score.  Watch your debt to income ratio.  You should use less than 36% of your monthly gross income to pay your debt each month.  Lastly, use cash.  Take a portion of your income in cash and limit non-essential spending (coffee, snacks, entertainment, mall shopping) to using cash instead of credit or debit cards.  Studies show that people are more aware of their spending when they use cash instead of plastic.

Parties getting divorced spiral downward when they are forced to live together for long periods when they cannot sell their home and neither can obtain a mortgage loan.  The downward spiral creates arguments about all sorts of issues, including child custody that the children in the house can hear.  Therefore, it becomes very important to control debt early in order to open up possible solutions for separation and divorce.                                                                                                                                                                       

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Law Office of Steven J. Hirsch, Esq

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