Did you know that divorce may effect your credit score?* The change of marital status is not itself the reason but rather due to the Parties’ behavior. Some acts which are generally known to cause a negative effect:
1. One of the parties defaults on joint debt. While sometimes it’s purposeful or vindictive, payments could also just be overlooked (especially during an emotionally overwheling divorce process). While many Separation Agreements and the following orders include a division of marital debt, the language establishes an expectation amongst the parties but may not actually protect any claims from a creditor.
2. Closing joint credit accounts can have a negative effect on one of the parties ability to access credit. As it’s historically been said, many people are just one emergency away from a financial disaster that will wipe out their checking or savings. Given the current inflation, it is likely that many people do not even have that rainy day, emergency fund, making access to credit all that more important.
3. Removing an authorized user can be deterimental to the person who does not already have an established history of individual credit. Prior to closing accounts, the parties should discuss whether one of them should keep that account.
How can one best protect themselves? The answer is simple: parties should communicate and to treat one another with respect.
*Please note that we are definitely not experts in credit; however, the above-information is a general collection of what we’ve heard from our clients over the years. We’re happy to connect you with someone who can provide more specific information and planning.
Faye & John
Can you imagine purposefully living with your ex after you’ve separated? It’s not uncommon for couples to live together during the separation process, but cohabitation after the divorce is final has historically been very rare.
Prior to Covid, we can remember only one couple that lived together post divorce. The husband wanted to keep the marital home but he was unable to buy out the Wife’s share of the equity at the time of the divorce; typically, in this type of situation, the home would have typically been listed for sale but the wife graciously agreed to wait until after her 99 year old father in law, who also lived there, passed or was otherwise relocated. *
While this type of situation is still very rare, some couples do consider some form of cohabitation post-divorce. We recently worked on an agreement where the parties alternated use of the marital home depending on who had parenting time. We’ve also created agreements for parents who intend to live together so that they both could be physically present on a daily basis. While we always love the idea of providing a united front to the children and keeping things are “normal” as possible, we haven’t found any research to support whether these situations are actually in the best interest of the children.
If parties are going to even consider cohabitation post-divorce, there need to be some well established ground rules. How long will this arrangement last? What happens if one person decides that they no longer wish to cohabitate or wants to buy out the other? Who is covering each specific household expense? Who will be responsible for household chores? Will one parent be paying child support during the cohabitation period? Will they be able to problem solve and communicate better once divorced? What will happen when one person starts to date?**
There are a multitude of reasons that people consider cohabitation post-divorce, including:
1. The transition from a two income household is not always easily manageable if both parties are not self sufficient (with or without child support or alimony);
2. One party may have credit issues which may effect their ability to buy or rent; OR
3. Suitable housing may be difficult to find, especially if a person is hoping to remain in the same school district or needs an apartment with more than two (2) bedrooms.
While these reasons (and others) are certainly understandable, the traditional options are still the default: either you list the house for sale or one party buys out the other by giving them a portion of the equity in the marital home.
As always, we welcome your thoughts our newsletter or answer any questions!
Faye & John
* In this case, waiting actually increased the value of her equity in the home due to the spike in home values during this period.
** Do you remember this scene from The Break Up? Ironically, this is probably the least uncomfortable and complex situation that might occur:
ong, long ago, we were in a graduate school statistics class* as a precursor to beginning a Master’s thesis study. The most important take away from the class was understanding that how you manipulate numbers determines whether your hypothesis is supported or disproven. Whether by median, mode or average, we still love to look at data and determine how to best use it to our client’s advantage. We recently found some some statistics related to divorce** that we thought would be fun to share:
1. The divorce rate has dropped significantly over the years last 10-15 years. While it was previously thought that you had a 50% chance of getting a divorce, the current rate is thought to be around 39%. The reason for the decline could be due to so many things, including millennials getting married later or not at all.
2. Nevada continues to have the highest divorce rate in the United States. Apparently, what happens in Vegas does not stay in Vegas and regret does fit in a suitcase.
3. Massachusetts actually has one of the lower rates of divorce in the United States. It is thought that the divorce rate within the Commonwealth is approximately 2.6%; however, this statistic is slightly skewed because some states, including Georgia, Hawaii and Minnesota do not even report their statistics.
5. The global divorce rate has increased by 252% since the 1960’s. Russia is believed to have the highest divorce rate in the world; it seems reasonable that it will continue to maintain that top spot given the stress related to recent world events.
6. Second (and any thereafter) are more likely to fail than a first marriage. We often ponder if people who are married more than twice are really just hopeless romantics who aspire, but struggle to find ever lasting love.
Work Hard for the $$$.
“Nine a.m. on the hour hand
And she’s waiting for the bell
And she’s looking real pretty
Just wait for her clientele
She works hard for the money
So hard for it, honey”
We never really loved the song “She Works Hard for the Money” when it was released waaaaay back in 1983. Don’t get us wrong: we love Donna Summer*; she had a set of pipes on her like no other.
When we listened to the song recently, we started thinking about what our clients go through if and when they go back to work post-divorce. While many parties have worked throughout their marriage, quite a few have opted to stay at home to raise children or to keep the home in order.
Several things may determine whether a spouse who has not worked during the marriage will go back into the workplace, including:
1. The age of the person;
2. Whether the person wants to go back to work (ie. social interaction, intellectual stimulation, wanting to use their education, needing something to do, etc); OR
3. Whether the person needs to go back to work to support themselves, get insurance or maintain a home.
Going back to work can turn out to be a very good thing. It can build confidence, self esteem and will usually make for some great stories regardless of job or career. Divorce Magazine has some great thoughts on this topic too:
As always, please let us know if you have any questions regarding this or any other legal matter.
John & Faye
* Fun fact: While writing this newsletter, we sat trying to decide whether “Hot Stuff” or “Dim all the Lights” was our favorite Donna Summer song of all time. What do YOU think?