Tag: Divorce & Credit Scores

Avoid the American Hustle

As if divorce wasn’t bad enough, the FBI warns the most common targets of dating scams are divorced women over 40. Women are courted online, and after weeks of intimacy, money is missing. This post contains a few post-divorce tips to protect yourself

Dirty Rotten Scoundrels

According to an Atlantic magazine article, scams are abundant, and Derek Alldred seems to have scammed at least a dozen women out of about $1 million since 2010.

He used different names and occupations, but the identities he took on always had an element of financial prestige or manly valor: decorated veteran, surgeon, air marshal, investment banker.

Con artists have long known that a uniform bolsters an illusion, and Derek was fond of dressing up in scrubs and military fatigues. He tended to look for women in their 40s or 50s, preferably divorced, preferably with a couple of kids and a dog or two.

The age of the internet, with its infinitude of strangers and swiftly evolving social mores, has also been good for con men. The FBI’s Internet Crime Complaint Center, which tracks internet-facilitated criminal activity, received nearly 300,000 complaints in 2016.

Of those scams, more than 14,500 were for relationship fraud, a number that has more than doubled since 2011.

Divorce Tips

I’ve written about practical tips after your divorce before. Consider that once the lawyers, are gone, who is there to guide you on the many questions? There are some immediate steps to take to ensure your hard-fought interests are protected – and your financial documents reflect your new marital status.

Once your divorce is final – meaning a final judgment is entered – you should review and revise, if necessary, the following legal and estate planning documents:

  • Trusts
  • Powers of Attorney (property, healthcare, HIPAA, etc.)
  • Will
  • Life insurance policies
  • Retirement accounts

What can happen if you don’t?

One example is common. If your ex-spouse remains the beneficiary of your life insurance policy and you pass away, the proceeds will go to your ex-spouse instead your children.

The opposite can also be true. In Florida, the plain language of the documents controls. To the extent your or your former spouse claimed a right to remain as the beneficiary under a life insurance policy – as a condition of the dissolution of marriage – your rights can be waived.

The Sting

The FBI warns that in many scams, women are courted online by men who claim to be deployed in Afghanistan or tending an offshore oil rig in Qatar. After weeks or months of intimate emails, texts, and phone calls, the putative boyfriend will urgently need money to replace a broken laptop or buy a plane ticket home.

According to the Justice Department, only 15% of fraud victims report the crimes to law enforcement, largely due to shame, guilt, embarrassment, and disbelief:

You feel really crappy about yourself,” Missi told me, then slipped into a tone that sounded like the mean voice that lives inside her head: “I’m a stupid woman; I’m a dumb, dumb, dumbass.

One excellent way to dispel yourself of any con-man fantasies, however, is to spend some time with the people they’ve hurt. Their victims are negotiating ruined credit scores and calls from collection agencies.

Several were so flattened by the experience, they’ve had old medical problems flare up or have struggled to go back to work.

The Atlantic magazine article is here.


House Buying Tips After Divorce

Buying a house is a big deal at any point in your life. However, if you’re looking to buy a house in mid-life, after a divorce, the decision is even bigger. That’s because you have to consider your wealth, retirement and fluctuations in how much you earn. Here are some things to consider before shopping.

Buying Tips

Check your debt

After the housing crash of 2008, buying and lending requirements for real estate have changed a lot.

There is increased scrutiny of mortgage applications. Before you even start to look for a house, look at your financial situation. How much money is available to you after spousal support and child support are paid, and after the property division?

Your ‘debt-to-income ratio’ is the amount of debt you have, as compared to your overall income. That debt-to-income ratio number is as important as your credit score.

Any lender is going to look carefully at how much debt you are carrying after the divorce. So, if you want to buy a house after the divorce, and debt is a big concern, plan to reduce your debt before you apply.

Florida Property Division

I’ve written about property issues before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.

Equitable Distribution

Generally, courts set apart to each spouse their nonmarital assets and debts, and then distribute the marital assets and debts between the parties.

In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal.

Unequal Distributions

However, if there is a justification for an unequal distribution, the court must base the unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.

Additionally, courts can consider the contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.

However, courts generally can’t base unequal distribution on one spouse’s disproportionate financial contributions to the marriage unless there is a showing of some “extraordinary services over and above the normal marital duties.”

More House Buying Tips

Buy a house you can afford.

Buying a house within your budget is a great idea, and this is especially true when buying a house after your divorce, and during your middle years. That’s because your income can fluctuate due to changes in employment and the payment and receipt of support. So, it is important to have a realistic view of just how much home you can afford.

Looking for a home you can afford will help you avoid late payments.

There is also the chance of foreclosure because you did not plan to have the money to make the mortgage payment without dipping into your retirement, or savings.

Make a Big Down payment.

If after the divorce you have sufficient funds, consider using them to make a large down payment amount. Typically, twenty percent down is customary.

Making a larger down payment will lower your monthly mortgage payment, and could shorten the length of the mortgage.

Buying a house after you divorce in your middle years requires a close look at what your debt and expenses are. You want that debt and home expense to be a low part of your Florida living requirements.


Occupation and Divorce

If you marry a flight attendant are you more likely to divorce than if you marry a software developer? A recent report on occupation and divorce asks that very question.

The Study analyzed data from the 2015 American Community Survey, and, based on the number of people in a particular occupation who had married at least once, calculated the percentage of people who divorced.

Librarians have about a 28% chance of divorce, while phlebotomist have approximately a 46% chance.

Another un-surprising part of the study, people with less income are less likely to be married in the first place, and more likely to be divorced.

About 25% of “poor” adults aged 18 to 55 are currently married, compared to 39% of working-class adults, and 56% of middle- and upper-class adults (above the 50th percentile).

What the report found is that there is a divorce rate of at least 48.8% in the occupations “most likely” to experience divorce; the divorce rate is under 22% in the 10 occupations “least likely” to be subject to divorce.

Divorce in Florida

I’ve written about the correlation between occupation and divorce before. The numbers don’t paint the whole picture. If a person divorced and remarried by the time of the Census, they would be counted as married.

There are various reasons cited in the study for the fault behind the divorce rate. It could be that spouses in some jobs are just quicker to jump into the next marriage than others.

The data on occupation and divorce doesn’t reveal whether it’s the nature of the jobs that lead to divorce, or if people prone to unstable relationships are drawn to certain professions.

Florida abolished fault as grounds for filing a divorce. The only ground you need to file for divorce in Florida is to prove your marriage is “irretrievably broken.”

But is no fault divorce the reason the for a higher divorce rate among bartenders than optometrists? Some people think so, and want to return to the old “fault” system to promote families.

Occupation as Predictor of Divorce

So, what are the occupations with the highest divorce rates:

  • Telemarketers
  • Bartenders
  • Flight Attendants

The occupations among the lowest divorce rates:

  • Actuaries
  • Physical Therapists
  • Chemical Engineers

Keep in mind that correlation is not causation. No one knows which bartenders are likely to stay married or divorced, nor give advice on choosing a profession based on the divorce rate.

Nor can the report tell you about those who choose to become bartenders may be less likely to have stable marriages for reasons other than their choice of profession.

Rolling machine operators seem to be in the same category today more because of their declining employment prospects than because of increased temptations to stray.

One question that does not command enough attention is why the correlation between relationship stability and employment prospects is so strong.

Commitment to an unstable partner — someone who runs up the credit card bills, incurs large health care expenses, or needs to be bailed out of jail — can diminish family savings, a source of peril.

The report is available here.


Divorce & Credit Scores

By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Divorce on Monday, October 5, 2015.

No, this isn’t about how to preserve your credit during divorce (a useful topic by the way). Instead, it’s about whether you can predict the stability of a marriage based on credit scores.

Credit scores have become ubiquitous in household financial and non-financial decisions. For example, credit scores are a feature of every mortgage taken out, and every car and consumer loan you apply for.

A good credit score impacts your access to credit, the interest rate you borrow at, and your ability to buy on credit despite changes in your income. Lately, your credit is being used in areas besides debt underwriting.

For example, companies use them to see how much your car insurance should be, how much your cell phone plan will cost, and approval for renting a house. Lately, employers are running your credit score before their hiring decisions.

I’ve written before about the latest trends in divorce: like will your divorce last longer if you move to New Jersey? Is there a right time to marry? Along those lines, a new paper suggests evidence of the role credit scores play in staying married or in a long-term relationship.

Two professors have found that a couples’ average level of, and the match quality in credit scores, measured at the time the relationship starts, are highly predictive of subsequent separations.

That’s because initial credit scores and match quality predict subsequent credit usage and financial distress. Financial distress and the amount you buy on credit, in turn, correlate with relationship dissolution.

Credit scores and match quality appear predictive of subsequent separations even beyond these credit channels, suggesting that credit scores reveal an individual’s relationship skill and level of commitment.

The Abstract of the paper looks interesting. They explored how credit scores play a role in forming marriages and long-term cohabitations, as well as your ability to maintain a relationship. Not surprisingly, they found a large and significant role for credit scores in the formation and dissolution of committed relationships.

The study’s results lead to a hypothesis that credit scores reveal information about an important relationship skill: an individual’s general trustworthiness and commitment to non-debt obligations.

They also found that when individuals have a long exposure to greater trustworthiness, as measured by surveys, they tend to have higher credit scores even years after they leave those areas.

The abstract can be read here.