When your marriage ends, you may be looking forward to the next phase of your life. But before you can begin to rebuild your life, you may need to take steps to rebuild your credit as well. It’s not unusual for people to suffer credit hits when their marriage dissolves. If this happens to you, you are not alone.
But it is important to remember that poor credit after divorce is only temporary, and you can take steps to correct it. Find out how you can begin to build financial freedom when you contact Coumanis & York for a free consultation. Call our office at (251) 260-3927 to get started on your case.
Close Old Joint Accounts and Open New Individual Accounts
One of the very first steps that you can take to begin rebuilding your credit is to start by closing your old joint accounts. Any checking, savings, banking, utility, phone, and other types of accounts that you may have shared with your spouse should all be closed.
Some people may elect to keep these accounts open temporarily while they wait for contracts to expire, but if you are able to close these accounts immediately, you can avoid running the risk of your spouse doing further damage to your credit.
After you have closed all of your joint accounts, you can open new individual accounts that are solely your responsibility. This is often the first step that people take in rebuilding their lives financially after divorce.
Get Your Financial Documents in Order
When you meet with your attorney, you’ll need documentation of your income, assets, and debts. The division of debt and assets is a big part of the divorce process, and you need a clear and complete picture of your finances before you can get started. Make copies of your last few years of tax returns, pay stubs, bank account statements, credit card statements, retirement account statements, and valuation information for any assets you may have. If you and your spouse own a home or any other real estate, get copies of your mortgage documents and title.
Review Your Credit Reports
Next you need to order copies of your credit reports. You are able to obtain one free copy of your credit report each year from each of the major credit bureaus. Make sure to request copies of your credit report from TransUnion, Equifax, and Experian in order to ensure that you have a complete picture of what credit bureaus are looking at when reviewing your credit report.
You should be sure to go line by line reviewing all opened and closed accounts, lines of credit, and be checking for any other discrepancies that may arise. You are allowed to report discrepancies to the credit bureau and request that changes be made.
Open Up a Secured Line of Credit
Another thing you can do to begin rebuilding your credit is to open up a secured line of credit. If you are already struggling with poor credit, this may seem counterproductive. But opening up a secured line of credit is a good way to get started. You can go to your bank and request a secured line of credit. Here, you will deposit a certain amount of money, usually somewhere around $500 is a good place to start, and that will act as your line of credit.
Then, you can use this card to make small purchases and pay the card off immediately after so that you are not having to pay interest on your purchases. The bank will then report that you are making regular payments to the credit bureaus. Eventually, you may be able to get your $500 deposit back and, as your credit score improves, open up additional lines of credit in order to further increase your credit limit and subsequently, your credit score.
One of the most important things you can do to begin rebuilding your credit after divorce is to start budgeting. You need to be able to live within your means and pay your bills on time in order to improve your credit score.
Failure to make on-time payments, or missing payments altogether, could have a negative impact on your credit score resulting in financial ruin. After divorce, be prepared to take a hard inventory of your income and expenses, and plan accordingly.
Get Help from a Bankruptcy Lawyer in Alabama
Despite the fact that your credit may have taken a turn for the worse when your marriage ended, your divorce is a great opportunity for you to begin to rebuild your life. This includes rebuilding your credit.
If you are interested in learning more about how declaring bankruptcy could help you in this process, reach out to an experienced Alabama bankruptcy attorney at Coumanis & York. Fill out our online contact form or give our office a call at (251) 260-3927 for a free, no-obligation consultation.