Can an attorney help you plan a post-divorce financial strategy?

Those going through a divorce should work with their attorney to develop not only a transition plan into post-divorce life, but also long-term steps to financial recovery. 

The good news is that a divorce filing generally does not hurt one’s credit score. After removing one’s name from joint bank accounts, credit cards, mortgages and other loan or credit obligations, an individual should be able to start with new accounts and take sole responsibility for his or her credit score. If only one spouse is going to keep the family house, it may be wise to refinance the mortgage solely in that individual’s name.  

However, any joint debt obligations to which an individual is a named party must be addressed, even if a court assigned the debt to the other spouse. The reason is privity of contract: A divorce court cannot change a pre-existing contractual relationship that a couple may have entered into with a third party who is not part of the divorce proceeding.

A post-divorce budget that is modest and allows an individual to pay of his or her credit card debt in full each month is a great strategy for improving one’s credit score. If an individual is struggling to regain financial footing after a divorce, an attorney may be able to negotiate with creditors for a more reasonable payment plan, or help an individual explore consolidation options. If a divorce decree awarded alimony, changed circumstances may present an obstacle to staying current on payments. An attorney can help in this regard, also, perhaps by applying for a support modification from the court.

Source: U.S. News & World Report, “5 Ways Divorce Affects Your Credit,” Paul Sisolak, April 14, 2016

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