How Divorce Ruined My Credit: And What You Need To Do To Prevent It Happening To You. ⋆ XRAYVSN (2024)

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The darkest chapter in my life was the 7 years I was married to my ex-wife (an ill-advised arranged marriage I got suckered/guilted into by family) and the year of divorce proceedings that followed when I decided to finally end the marriage.

It was both an emotionally and financially difficult time for me.

During the year of divorce I was hemorrhaging money, often getting monthly bills from my lawyer in excess of $15k.

Any savings I had evaporated as I tried to keep up with legal bills as well as spousal and child support during this time (that combination piled on another $4200/mo of expense).

Somehow I managed to stay afloat without resorting to borrowing on credit.

That is until the very last moment when the judge decreed that I had to pay $100k in cash to my ex-wife within 60 days of the divorce being finalized (to compensate for her share of her legal fees and other incidentals).

With all my liquid assets depleted, I did not have that kind of money available to me to satisfy his ruling.

I was then faced with 2 options, selling my shares of my medical office building (which at face value would still not have covered the required amount), or put the entire amount due on my credit card.

I actually explored the first option initially and tried in earnest to sell shares of my medical office building that I was a ground floor investor in.

Fortunately I had no takers at the time and years later these shares became so valuable that I still consider it my home run investment of all time.

With option 1 taken out of play, I ended up using a credit card access check to obtain the $100k, paid the associated fees, and then promptly handed the funds over to my ex.

With the cessation of these 5 figure monthly invoices from my legal team, I was able to pay off the credit card balance in a fairly quick time frame.

I thought I was out of the woods with my credit score left relatively unscathed.

I was, unfortunately, completely wrong.

My big divorce mistake.

During the marriage I had bought 2 condos that were for investment purposes, each carrying a mid 5 figure mortgage balance.

As my wife at the time did not work, the mortgage was solely granted because of my credit score and income.

In the division of marital property, the judge gave both condos to my ex-wife.

If I was smart, I would have asked the judge to order my ex-wife to refinance the properties and take my name off the mortgage.

Unfortunately it never occurred to me that I needed to do this.

Even worse was that my legal team also failed to mention that this would be a wise thing to do.

The repercussions from this lack of oversight.

By not having a court order mandate to have my ex remove my name from the mortgage, I essentially left myself financially vulnerable to whatever financial games my ex decided to play, intentional or not.

I had always taken pride in my credit score which I slowly built up from medical school/residency days (I believe I was in the mid 600s) all the way to over 800 by the time of my divorce.

I may have gotten 1 late payment ding on my credit report in the very beginning because of one missed medical student loan payment when I was a resident (how I approached paying of my student loans is not advisable as I consider it one of the major financial mistakes I have made in my life).

But other than that one instance, my payment history was untarnished.

That is until after my divorce.

Within a couple of years I started getting late payment notices from both mortgage companies servicing the condos.

Days in arrears starting climbing, one month, then 2 months, then 3 months and so on.

On top of late mortgage payments by my ex, apparently she was not paying the HOA fees as there were more than one phone call from the HOA asking if I had contact information for my ex-wife as she had not paid the fees for multiple months.

The fact that my ex was getting rent from both condos that more than covered both the HOA and mortgage payments made her inability to settle her obligations even more perplexing.

Soon the letters I received from these mortgage companies had a change in tone, no longer just notifying me that I was late on these mortgage payments, but they were about to initiate foreclosure proceedings.

As these properties were no longer mine, I felt no need to do my ex any financial favors by paying the balances due.

I know my ex had to be keeping track of these late payments, etc because almost like clockwork, right before the official deadline for foreclosure to occur the balance would be paid in full.

This apparently reset the clock for the mortgage companies and the same cycle would soon play itself out.

I am not sure how many times this occurred, but a rough estimate is at least 3 times.

During this time I could see my credit score starting to precipitously fall.

One of the condos actually did go into foreclosure and a short sale happened.

Although having a foreclosure on your credit report feels like a death sentence, I was a bit relieved because I knew at least I would no longer be held hostage by my ex’s payment habits and that after 7 years it would no longer be reported on my credit history.

As both mortgages were for 30 years (with over 20 years remaining), I could have been in credit score limbo for 2 decades.

There were some consequences I endured because of the foreclosure.

One of my credit card companies sent me a letter saying they were promptly closing my account.

Another credit card company notified me that they were dramatically reducing my credit limit (I believe it was over $75k previously) down to around $15k.

The foreclosure of the first condo left only one condo remaining that had my name tied to it.

I was secretly hoping that this too would be foreclosed upon and that I would take the credit score hit at the same time as the other one and start the 7 year countdown.

Unfortunately that was not the case as somehow she again swooped in at the last minute and paid off the owed balance prior to the mortgage company officially foreclosing on it.

I am not sure what circ*mstances occurred where she was able to save one condo but not the other, but as long as one remained she still had power over me.

During this entire period I petitioned and pleaded with the mortgage companies, sending them the official divorce decree with marital divisions etc in an attempt to remove my name from the financial obligations.

This, unfortunately, fell on deaf ears.

The mortgage companies, unmoved, continued to send derogatory reports to the credit score companies.

Crestfallen I felt like I had to accept the fact that I would be in financial credit score limbo for the remaining term of the last outstanding mortgage.

It’s always darkest before the dawn.

It truly came out of nowhere, but one day I received notice that the remaining condo was being sold.

I did not know the exact details of how this sale came about but I was not going to look a gift horse in the mouth.

I was absolutely ecstatic.

When the 2nd condo sale closed, that was the last financial hold my ex had on me.

Sure the financial damage inflicted was pretty brutal, but at least further damage was no longer on the horizon.

I could pick up the pieces and finally try to rebuild my credit score.

I am pleased to say that although my credit score has not quite gotten to the pre-divorce level I had, it has gone up quite impressively even with the foreclosure ding still having not dropped off the reports.

My ex was not quite done yet.

I truly thought I was done with my ex but she had one parting, minor shot, left in the barrel.

I followed the divorce decree by the judge to the letter and satisfied every stipulation put forth in the appropriate time frame.

I, foolishly, assumed my ex would do the same, and would at least think her legal counsel would make sure she upheld her responsibilities to follow the court orders.

Again I was wrong (a recurring theme whenever it comes to anything to do with my ex).

This particular issue was in regards to the marital property I was awarded (the one with the waterfall).

The reason I got to retain this magical property was not because of the goodness of my ex’s heart.

No. It was because the property at the time of divorce just happened to be underwater courtesy of the crash in the US economy, particularly in real estate, that preceded the divorce.

My ex was supposed to relinquish her claim to the property by enacting a quit claim deed on it.

Years later, when I started making plans to subdivide my property (for potential sale of my guest house), I found out that my ex still remained on the deed and that a quit claim deed was never filed by her.

I was absolutely furious.

Here I had jumped through so many hoops the judge threw at me (including that absolutely insane demand to fork over $100k in cash with hardly any time allowed to do so) and she had just the one thing to do and didn’t.

Because my ex had gone back to England by this time and I really had no means to communicate with her (even if I wanted to), I ended up having to rehire my divorce lawyer, draft up a motion and present my case before another judge who then divested my ex’s interest in the property officially.

That side track I believe cost me close to $2k to accomplish.

Divorce tips.

Just because the judge signs the divorce decree does not mean it is over.

It is vital to protect your interests.

Make sure to remove your name from any financial obligations when it comes to property awarded to your ex.

It is also wise to make sure that your ex has followed the judge’s instructions as well and don’t assume it was or will be done.

I also suggest going reading the following guide I created for people going through a divorce:

The High Income Earner’s Ultimate Guide To Surviving Divorce Complete Series:

• • • Part I,
    • Part II,
    • Part III,
    • Part IV

Note:

If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”

Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.

-Xrayvsn