One of the most serious effects of divorce is its effect on your credit. Many people walk away from a divorce having to rebuild or repair their credit just to be able to move forward and begin a new life.
The other effects of divorce are severe enough without a person also having to deal with repairing damaged credit they may not have even realized existed until after the divorce. Being able to start over means each party to the divorce must make arrangements to clear up any negativity that exists on their credit. While it seems easy enough to do it is more often than not quite complicated.
There are many ways you can make repairs to your damaged credit. These effects of divorce take time to fix, and in order to repair your credit you must first know what is in your credit history. There are several options you can use in order to repair a damaged credit history :
• Inaccurate information is the most common problem with a person's credit history and is the easiest to repair since it requires only a letter of explanation to the reporting agency that must conduct an investigation and remove all inaccurate information.
• Pay off any outstanding delinquent accounts
• Obtain a consolidation loan to pay off all outstanding delinquent accounts
• Enlist the services of a debt management company to negotiate a settlement or repayment plan
• Work with the creditors on a structured payment plan
Inaccurate information is one of the most common problems that plague those recently divorced. Some of the inaccurate information relates to one of the parties to the divorce obtaining credit in the other party's name after the date of separation, but there are other types of inaccuracies as well including fraud and identity theft. Many people do not discover these errors until after they file for divorce and begin seeking to establish credit in their own name. The problem is by that time the effects of divorce have already done its damage, so even inaccuracies take longer to identify and prove than they would have at an earlier date.
For those who have more serious effects of divorce other than inaccuracies, the above solutions may be helpful and put you on the right track. We deliberately left bankruptcy out of the equation because this is something you should use only as a last resort. Unlike the other methods, in many cases bankruptcy can remain on your credit report for ten years instead of seven which makes it more difficult to rebuild and establish credit in your own name. You should only seek bankruptcy as a last resort and only after you have attempted to work with your creditors directly or with the assistance of a debt management company. In some cases a bankruptcy on your credit report can prevent you from obtaining employment or auto insurance at a reasonable rate. All of these financial effects of divorce weigh in differently but they are all equally important.