How a divorce can trash your credit score and what to do about it…
A divorce can provide many opportunities for credit destruction. The mere act of setting up two households can place a huge strain on finances not to mention extortionate levels of child support or alimony ordered by the court (I was ordered to pay 90% of my income in “temporary” support orders).
On the other hand, there are also vindictive attacks on your credit. In Nevada, your assets and liabilities remain community property until the divorce decree is signed by the judge. Thus, your soon-to-be-ex wife can rack up debts, clear out bank accounts, and not pay bills – damaging the credit of both of you. Nevada has a provision for a “joint preliminary injunction” that orders both parties to not accrue debt. However, these orders can and do get violated all the time.
My ex-wife has also used a creative ploy of not paying the co-pays for medical visits involving my children. The bills get sent to her address but I am the ‘guarantor’ on the health insurance policy. So when the bill goes to collections, the collection agency holds me responsible for the unpaid $15 bill that I have never seen. Two of these collections in the last six months have seen my FICO score plunge by 80 points.
The solution is to file a motion seeking a) damages for credit destruction and b) a court ordered deletion notice to remove the negative information. While courts may find it difficult to quantify the damages (although services are springing up offering to value the effect of lost credit), they have an easier time of issuing a deletion notice that instructs the credit agencies to remove the offending information.