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The credit issue is vital. These days, it seems, we can hardly exist in America unless we pull out a credit card to pay the tab. If you have been working all along, your credit rating will not be affected by your divorce. If you have been relying on your spouse's income, on the other hand, you will have to establish your own credit history. Although the prospect seems intimidating, it's not as formidable as it sounds. |
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First, you must be able to identify your sources of income, including salary, interest, and, of course, maintenance. Because banks are seeking good credit risks, they will be looking not just at your income, but also at debts, credit history, collateral, and stability (how long you've been living in the same place). There's a formula to this, and it's not mysterious: If your income-to-debt ratio is 30 to 40 percent (you use no more than 30 or 40 percent of your income to pay mortgage, car loans, and the like), banks will consider issuing you a bank credit card. |
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If you don't have a viable, personal credit history, you can start to build one by shopping at stores that give instant credit; department stores, gas stations, and local stores are all good candidates. Begin by making small purchases on credit, and pay your bills promptly. Then get a Visa or MasterCard. Pay your debts on these cards right away, too. If you're done things right, you should have your own, positive credit history in about a year. |
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In addition to generating income and establishing credit, you will have to come to terms with your debt. You and your spouse most likely have joint debts. These would include a tax debt, a mortgage, a car loan, and credit cards. If you are the nonmoneyed spouse, you may have your name on the mortgage or car loan statement anyway; this means you are in debteven though you have no income to offset the debt. |
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Third parties, such as the IRS and banks, don't care whether you are getting maintenance or child support. They don't care if you are divorced. They just care about the money you owe them and how they will get it back. They are not bound by the divorce settlement. They will hold both you and your spouse liable for payment. |
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Jim, for instance, owned a construction company. One year, he hid income by simply not mentioning it on his income tax statement. His wife, June, was shocked to learn that the IRS held her as well as her husband liable for his income tax evasion. She was not protected by their divorce settlement because the income tax statement was filed jointly. |
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