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Divorce – A Potential Credit Disaster

Most people know that divorce proceedings can be very costly in terms of time, money, and tears. Many people have the foresight to plan for the financial strain of divorce through the negotiation of a pre-nuptial agreement. However, what many couples fail to consider, and what may come back to haunt them years later, is the effect that a divorce may have on your credit. While not an immediate financial cost like court fees and distribution of assets, the potential damage to credit can have negative implications on life long after the divorce has faded from memory.

How does this credit disaster take place? The root of the problem is that lenders are not required by law to honor court decrees which place the burden of paying off a joint loan on the shoulders of one party. In other words, even if a court decides that Spouse A is responsible for paying off a loan that Spouse A and B took out together during their marriage, the lending company may still hold both A and B accountable for the debt. If Spouse B mistakenly assumes that he or she is no longer bound to that financial obligation, he or she may be penalized for missed payments which destroy his or her credit score.

Of course, there are ways to minimize the risk that divorce poses to your credit. For example, if a divorce is brewing, you should start preparing your finances by splitting joint bank accounts, refinancing mortgages and car loans, and converting credit card accounts. You should also plan for the possibility that a bitter former spouse may try to take revenge on you by, for example, applying for credit cards in your name and ruining your credit. To prevent this, you can choose to opt out of receiving pre-screened credit card and insurance offers before the divorce actually takes place.

There are many issues to consider and pitfalls to watch out for when going through a divorce. Things can turn ugly very quickly, as anyone who has been through a divorce knows. Don’t try to go through this difficult process alone – call a San Diego divorce attorney from the Fischer and Van Thiel law firm at 858-935-6211 today.

Mike's Top FAQs About Divorce

401K plans and divorce

401K plans and divorce

Question Detail

If my spouse waives his right to my 401k plan, is there any circumstance that the court will still award him half or a portion of my 401k plan?

Answer

It is theoretically possible that a court can disturb an agreement to waive rights to property, but it is unlikely.  Courts will generally treat agreements as contracts, and thus are likely to strike an agreement only if it is unconscionable, induced by fraud, undue influence, duress or is against public policy. The judge cannot “reject,” nullify, or modify the provisions of an agreement merely because of his or her personal belief that a different arrangement should be made.

A marital settlement agreement, or MSA, can be used as a contract between spouses regarding the division of property that would otherwise be subject to community property laws. An MSA is subject to general contract laws, meaning that it can be found invalid if terms are against public policy (which includes, but is not limited to, (a) abrogating the statutory child support duty or impinging on the court’s jurisdiction to award child support, (b) limiting the court’s exercise of child custody jurisdiction, (c) “altering legal relations,” (d) “promoting dissolution,” and (e) providing for “fault”-based penalties at marriage dissolution) . The MSA can also be found invalid if entered into as a result of fraud, duress, menace, undue influence, or other factors which may make the agreement void or invalid.  Generally, an agreement such as the MSA is favored.  Hence, if there are no legal or equitable grounds for rescission or reformation it is binding on the parties and the court without express approval.

Posted in: Divorce, Family Law, Property Division

Can I get child support if I am not getting a divorce?

Can I get child support in California if I am not getting a divorce?

Question Detail

I have been separated for two years from my wife, and my kids live with me. Can I get support without filing for divorce in California? We have not been living together since our separation, and even file taxes separately.

Answer

You do not need to file for divorce in order to get support. You will need to go through the court to obtain a child support order so you will have to file something. You can contact your local Department of Child support services office and they can help you get started. So while you do not have to file for divorce, you can file for a legal separation. The court needs to know that you two have in fact separated and there is one parent who is the full time provides and therefore in need of support.

Posted in: Child Support, Divorce, Family Law

Can I move out with my daughter before the divorce in California?

Can I move out with my daughter before the divorce in California?

Question Detail

My wife and I are going to divorce, but we have not filed yet. We are always fighting, and my daughter, who is 7, is very stressed with the way we are living. Can I move out with her, if I do not move far away and let him see her all the time? He is not happy with my choice. Is this legal?

Answer

Yes, you can move out with your daughter, assuming there are no court orders already in place regarding custody and visitation. It is important to maintain frequent and continuing contact between the child and the other parent. When the court makes custody and visitation orders they will look highly upon the parent who facilitated contact with the child and the other parent. It is important to make the transition as easy as possible for the child.

Posted in: Divorce, Family Law

Is there a statute of limitations on owed child support?

Question: Is there a statute of limitations on owed child support?

Question Detail

An ex lover of mine (20 years ago) just approached me out of nowhere about getting tested to see if her son is my child. He is 20 and I live in California. I am trying to find the statue of limitations for child support if indeed I take the test and the child turns out to be mine.

Answer

Unless the mother has made a claim for child support with the welfare office or her local Department of child support services office, they cannot now collect from you on child support. Since he is no longer a minor child now that he is emancipated, there are no obligations for child support. You can get tested to see if you are the father, but you do not have to.

If the state has paid out welfare for the child, and it turns out that you are the Father, there can be some potential liability there with having to pay back the state the money they paid out. If this is not an issue, then they cannot now ask you to pay for child support.

 

Posted in: Enforcement, Family Law, Spousal Support / Alimony

Is the opinion of the child ever taken into consideration in a divorce?

Is the opinion of the child ever taken into consideration in a divorce?

Answer

Typically the Courts will take the child’s opinion into consideration at the age of 12. There is no set age, it depends on the maturity level of the child. If a child is of sufficient age and capacity to form an intelligent preference to custody the court can take it into consideration. It is important to note that all judges will rule for what is in the child’s best interests whether it be for the mother or the father.

Posted in: Child Custody, Divorce, Family Law

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