Chapter Eighteen 

The Credit Killers: Five Situations That
Make Credit Worthy People Seem Unworthy

Divorce
Probably the most common cause of credit catastrophe is the age-old curse of marital meltdown. When two people split up, the emotional upheaval, combined with the added stress of divorce expenses, a double household, child support, child care and a lack of clarity about who should pay which bill almost always leads to credit score catastrophe for everyone involved. Typically, though, only one of the former couple is truly responsible for any one debt. In some temporary orders and in most if not all divorce decrees, the judge usually assigns each debt to only one person. From that point on, the other party has no idea if the bill's being paid or not. In fact, since the couple generally moves apart, there's no way for one party to check on the other party's payment habits. In some situations, one spouse may even default on the bills that he has been ordered to pay leaving the other to suffer the fallout of his often malicious inactions. Even with a decree of divorce entered by a court, creditors generally hold both husband AND wife responsible for ALL joint debts and often creditors hold them responsible for debts that weren't joint debts. It doesn't matter a lick what the judge said, if both parties are cardholders (or even if both parties have used the card at some time) the creditors will try to collect from both. The credit report fails to accommodate even the simple fact that the judge has entered an order of the court assigning the debt to ONE of the two parties. Sure, the creditor may have both the husband and wife on-the-hook. But does that mean that the credit score should weigh both the same? It's ridiculous to penalize a spouse who is paying all their court assigned bills on time and in full because the other spouse jumps off the deep end. It's very common to see one former spouse file for bankruptcy just to free themselves of the debts incurred and signed for by the other person in the failed marriage. Sometimes, bankruptcy is the only way to truly finalize a divorce! And, yet, the credit scoring system is blind to fairness in a divorce. Regardless of whether or not the person was responsible for the debt, regardless of whether or not the person was paying their portion of the debts and regardless of whether or not the person was even informed of the default, the credit score takes none of this into account. Not only does this insane system hurt the divorced couple, but it takes them out of the system of credit. If a good person, who keeps her eye-on-the-credit ball and carefully makes all of her payments toward the debt she owes, is then tossed out of the credit system because an ex-spouse defaults on his obligations and becomes a deadbeat, doesn't that hurt the credit card companies? Isn't she still a good credit risk and a good customer who now is lost?

Credit Revolution: Path of the Smart Consumer
© 2007 John C. Heath, Esq., Dr. Randy Padawer, Jayson R. Orvis. All Rights Reserved.
Published by Far Cliffs Multimedia, LLC

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Fixing your credit after a divorce
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