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By Mi ke Rober t s





The Cr edi t Sol ut i on
Copyr i ght 2012 by Mi ke Rober t s


1

Copyr i ght Inf or mat i on:

Copyright 2011, 2012 by Mike Roberts

All rights reserved. No part of this book may be reproduced, distributed,
transmitted, stored in a retrieval system or used in any form or by any means,
whether electronic, mechanical or digital, except as may be expressly permitted
by applicable copyright laws or as expressly allowed by the publisher or the
author in writing.



Publ i sher Inf or mat i on:

Published by Smart Consumer Solutions, LLC, 601 Van Ness Ave, STE E869
San Francisco, CA 94102.


Di scl ai mer :

All of the information contained in this publication is true and accurate
according to the best information available to me at the time of publication.
Please understand, however, that laws and credit industry practices and
procedures are constantly evolving; so you should independently update laws,
practices and facts before you take action. I do not accept any responsibility for
errors or mistakes of any kind, or for any damages or losses that might result
from the use of any information provided.

Also, I am not a lender, a collection agent or a credit reporting agency. I am not
an accountant or an attorney, and nothing in these materials is intended as
professional advice. It is personal opinion only. I am providing it to you without
any warranties or guarantees whatsoever. To obtain advice as to the tax or legal
consequences of any action covered in these materials, or any action that you
might consider based on these materials, you should consult an attorney, an
accountant, or both. What I have tried to do here is simply offer solid, useful
information that I have obtained through my own personal and business
experience. Any action you choose to take based on any information that I
provide, including forms and other attachments, is entirely your responsibility.
2

Tabl e of Cont ent s

Introduction: ................................................................................................... 3
Why is maintaining (or restoring) good credit so important?.................... 3
Why do people run into credit trouble after a divorce? ............................ 5
Should you be worried? .......................................................................... 5
Can this be true? Is this fair? .................................................................. 6
How to protect your good credit if youre still married. .................................... 8
Get a handle on all debts........................................................................ 8
Establish credit in your own name. ......................................................... 9
Close any joint obligations. .................................................................... 9
What to do if youre in the middle of your divorce. ......................................... 12
What to do if youre already divorced. ............................................................ 13
If your credit is still OK. ........................................................................ 13
If your credit is damaged...................................................................... 14


3

Int r oduct i on:

If your e r eadi ng t hi s bonus r epor t , your e i n one of
t hr ee ver y common si t uat i ons:

You expect t o be di vor ced: Youre married now, but you think there
might be a divorce in your future. You dont see it happening next week,
or maybe not next month, but you have reason to believe its coming.

Your e i n t he mi ddl e of a di vor ce: Youre working through a divorce
right now. Youre still hashing out the details, and the final agreement or
decree has not yet been filed.

Your e di vor ced: Your divorce is complete. Its final. Your marriage is in
the past and youre doing your best to move on and build a new life.

If youre in one of the first two categories, thats good. Preventive maintenance
is always better, and less painful, than corrective surgery. This report will show
you steps you can take now, before the decree is entered, that will help you
hold on to a good credit rating once the divorce is final.

If youre already divorced, and your credit has suffered as a result, all is not
necessarily lost. Theres a lot you can still do to help yourself. Youll learn about
a program that you can follow to work out settlements with your creditors,
resolve your financial difficulties, and repair your credit.

Why i s mai nt ai ni ng (or r est or i ng) good cr edi t so
i mpor t ant ?

The moder n economy r uns on cr edi t . This is not a cash society. Unless you
are very wealthy, youre going to use credit (financing) to buy most of the
important things you need. Youll get a mortgage if you buy a home, youll
finance your car whether its new or used, and more likely than not youll use a
credit card for everything else- - from food and clothing to home furnishings
and appliances.

Cr edi t cost s money. Financing isnt free. You pay interest on your mortgage,
interest on your car loan, and interest on your credit card charges. The lower
the interest rate the better, of course; and people with good credit qualify for
the lowest rates. People with damaged credit dont. They pay more, sometimes
a lot more. Heres how it works.

4

There are three major credit reporting agencies (Experian, Equifax and
TransUnion). These huge companies keep data on each of us that creditors
everywhere (banks, finance companies and credit card companies) regularly
report to them. If you apply for a bank loan, the bank immediately will contact
one of these agencies to get an up- to- the minute credit report on you. Among
other things, this report will list all of your debts and flag any that have a poor
payment history or are in collections. The information in the report is used to
calculate your credit score (also known as your FICO score or your credit
rating), and the bank looks at the report and the credit score to decide what to
do about your loan application.

Bor r owi ng cost s l ess i f you have good cr edi t . Creditors use the credit reports
and scores to predict the likelihood of repayment based on past performance. If
they see that a person has had trouble paying in the past, they assume the
pattern will continue and they charge a higher interest rate.

If your credit report shows that all your debts are current, youve never fallen
behind on anything, and your credit score is high, youll get the loan you apply
for and youll pay the lowest interest rate available. If the report isnt so strong
and your credit score is lower (you have a spotty payment history), you might
get the loan but youll pay a significantly higher interest rate. If the report is
bad and the credit score is really low (youve defaulted and gone into
collections more than once), either you wont get the loan at all, or youll get
the loan but youll be forced to pay a ridiculously high rate of interest.

The cost of a bad cr edi t scor e can be enor mous. The difference in the
interest rate you pay on a loan can cost (or save) thousands of dollars in the
short run, and tens of thousands over time. Heres how a difference of only 2%
can affect what you end up paying for your house.

Lets say you have good credit and you buy a home. You finance
$200,000 over 30 years at a rate of 5%. Your monthly payment (principal
and interest) will be $1,073.

Now lets assume your credit isnt so good, and you have to pay a less
attractive rate, say 7%. Your monthly payment jumps up to $1,330.

In the first year alone, youll pay an additional $3,084 because of your
weaker credit. Over the life of the loan, your lower credit score will cost
you an astonishing $92,520.

The same principal applies whenever you finance anything. If your credit is
poor, the real out- of- pocket cost of whatever you buy will be much higher. The
only way to defend against this is to establish and maintain a good credit
rating. This isnt easy under the best of circumstances, and it can be much
more difficult to do if youre going through a divorce.
5

Why do peopl e r un i nt o cr edi t t r oubl e af t er a di vor ce?

People end up in financial difficulties after a divorce for a couple of reasons.

Reason #1: The first reason is obvious, and most people understand it all
too well: It simply costs more to run two separate households than it
costs to run just one. When two people get divorced, their combined
expenses usually go up and their combined income usually doesnt.

Reason #2: The second reason is not obvious, and most people dont
understand it at all: The fact is that unless precautions are taken, the
credit ratings of both parties will be damaged after the divorce if either
party falls behind on paying a debt. The financial consequences for both
parties, not just the one who fails to pay, can be disastrous.

All too often, a hard working, innocent divorcee doesnt learn that her personal
credit has been severely harmed until after the damage is done. The purpose of
this report is to alert you to the danger, and to show you the steps you can take
to either prevent or repair damage to your credit rating.

Shoul d you be wor r i ed?

You probably should. The truth is that the lurking, downstream credit problem
is something of a sleeper. Most people with good credit going through a
divorce dont realize its there. Their past credit history gives them a false sense
of security.

The pr obl em i snt t he di vor ce decr ee. If you were to stop in at your local
courthouse and start thumbing through all the divorce decrees on file there,
youd soon notice that they have many common features. In particular, youd
see that most of them do a pretty good job of nailing down two important
issues:

Pr oper t y r i ght s: Most decrees spell out in detail what rights the parties
will have in various items of property (Brenda Smith will have sole
occupancy of the family residence on Middle Street, Michael Smith will
have sole use of the 2010 Toyota Highlander, and so on).

Fi nanci al obl i gat i ons: Most final orders carefully dictate who will be
responsible for various financial obligations going forward (Michael Smith
will pay the existing mortgage on the Middle Street residence, Michael
Smith will make all future payments on the 2010 Toyota Highlander,
Brenda Smith will pay the outstanding balance on the CitiBank credit card,
etc.)
6


The pr obl em i s how peopl e under st and t hei r di vor ce decr ee. There is
nothing wrong with these common provisions. Property has to be divided up,
and financial responsibility has to be assigned. These are both important
matters, and they have to be covered in most decrees. The problem isnt with
the provisions; its with how the parties understand them.

If you were to track down the fictitious Brenda and ask her whether she
has any further obligation on the Middle Street mortgage, chances are
she would say, NO WAY! Thats Mikes problem. Thats all spelled out in
the divorce decree.

If you were to ask Brenda if she might be liable for Mikes Toyota
Highlander payments, she would say, NO, the divorce decree handles
that.

Finally, if you suggested to Mike that he might have some future liability
for the CitiBank bill, his response would run along these lines: Hey, the
court told Brenda she had to pay that. The CitiBank card is all on her.

Brenda and Mike would be wrong on all counts. They both will remain on the
hook to all three creditors after their divorce is final.

Can t hi s be t r ue? Is t hi s f ai r ?

Really? you might ask. How can this be? Wasnt the whole point of the divorce
to let Brenda and Mike cut their ties and lead separate lives going forward?
Well, yes, that was the point; but the divorce decree only controls the future
relationship between Brenda and Mike. It has no control at all over anyone else,
and certainly not their creditors.

The di vor ce doesnt af f ect t he or i gi nal l oan cont r act s. When Brenda and Mike
bought the home on Middle Street, they both signed documents (a note and
mortgage or a trust deed) promising to make the payments. They each
accepted a separate, independent obligation to pay the entire debt (the legal
term is joint and several liability).

Under the contract, the mortgage bank has the right to come after both
Brenda and Mike, or either one of them individually, if the payments
arent made on timeand not just for half of the balance due. Each one
of them has a freestanding, separate obligation to pay it all. If Mike
doesnt make the mortgage payments after the divorce, Brenda is
completely on the hook. It doesnt matter at all that the divorce decree
7

says that only Mike has to make the mortgage payments.

Almost certainly, the Highlander loan and the CitiBank card both work the
same way. If Mike doesnt make his car payment, the finance company
can demand full payment from Brenda. If she doesnt pay her credit card
bill, CitiBank can come after Mike for the entire balance.

Di vor ce cour t s have no power over cr edi t or s. Theres a simple reason why
the creditors keep all their rights against both spouses after the divorce: The
creditors are not parties to the divorce, and courts have no power to rewrite a
contract (like a mortgage or a financing agreement) unless both parties to the
contract are named in the legal action.

Nobody names his mortgage company as a party when he files his divorce
papers. If you looked at 100 petitions for divorce, youd see that only the
spouse names appear on the document. They are all captioned Michael Smith
v. Brenda Smith or the like. You will never see one titled Michael Smith v.
Brenda Smith, First Mortgage Bank, Toyota Financial, and CitiBank. Why not?
Because the typical divorce court has no jurisdiction over third- party creditors.
Even if an enterprising lawyer were to name a creditor as a defendant in her
clients divorce petition, the creditor immediately would ask to be removed as a
party and the court would grant the request.

Because creditors are not made parties to divorces, nothing in the final decree
affects them in any way. They keep whatever rights they had under the original
financing agreements.

Thi s means t hat i f Mi ke f ai l s t o pay, Br endas cr edi t suf f er s. If Mike doesnt
make Brendas mortgage payments, then Mikes poor payment performance will
show up on Brendas credit report. Why? Because if the bank doesnt get paid, it
simply reports that fact to the three big agencies that issue credit reports
(Experian, Equifax, and TransUnion), and it does so under the names of every
single person who originally promised to pay. If Mike falls behind, Brendas
credit rating will suffer the same as Mikes, even though she did nothing wrong
and might not even be aware, at least for awhile, that Mike has failed in his
obligation.

So thats the problem. Most married couples borrow money from time to time
as they move along in their married lives. When they do, they normally sign the
standard loan documents that the lenders put in front of them; and these
almost always require separate, individual promises to repay. If the borrowers
later get divorced, the separate promises to repay remain in place. They dont
die when the marriage dies, and all too often, they come back to haunt at least
one of the divorced parties.

8

OK, so t he pr obl em i s cl ear . What can you do about i t ? Actually, theres quite
a bit you can do. Exactly what steps are available to you will depend on where
you are in the processwhether youre

Still married with no petition yet filed,

Married with petition filed but not yet granted, or

Divorced.

How t o pr ot ect your good cr edi t i f your e st i l l
mar r i ed.

This section is going to cover several options to help you maintain good credit.
As you read through it keep this in mind- - Your mai n f ocus, i f your e st i l l
mar r i ed and have not yet f i l ed paper s, shoul d be on get t i ng cont r ol over
your f i nances and bui l di ng your own cr edi t hi st or y. The following
paragraphs will help you see how to do that in a variety of situations.

Get a handl e on al l debt s. The first order of business is to get
control. If youre the person in the marriage who normally pays all the bills and
has all the paperwork and files relating to those bills in one handy place, then
great. If youre not, you need to realize that youll have to take care of these
matters for yourself after the divorceyou might as well get a head start.

Get everything in one place. If necessary, start your own file, with
subsections or folders for each individual debt.

In each folder put a copy of the original loan documents (note, mortgage,
financing agreement, credit card agreement, whatever). Read these
carefully and determine whether youre both legally liable for the account.

Include copies of recent invoices. Make sure you know whether the
account is current, whether the payment history is OK, and who to
contact if you have a question about the account.
If youre not able to put together a list of all your debts, or if youre not sure
youre accounting for everything, get a copy of your credit report from one of
the three major credit reporting agencies (Experian, Equifax and TransUnion).
This report might show old store accounts or other obligations that are not
active but still open. It also might show problems with open accounts that you
thought were OK.
9

One more point. Just because you have a credit card with your own name on it
doesnt necessarily mean you are a joint owner on the account. You might just
be an authorized user, and there is a difference between a joint owner and an
authorized user. If youre a joint owner, youre responsible for the bill, along
with the other owner or owners; if youre just an authorized user, youre not. If
the documents you have dont make it clear which you are, call the creditor and
ask.
Est abl i sh cr edi t i n your own name. If your credit is sound, and
you dont already have a credit card, its a good precaution to apply for one in
your own name while youre still married.
If your credit becomes damaged after the divorce, you might not be able
to get a credit card. This way, youll already have one.

If you cant get an ordinary credit card through your bank because you
dont have your own credit history, consider applying to a credit card
company that offers low limit cards to people with distressed credit.

You might also consider following this time- honored method for
establishing credit: Borrow a small amount of money from your bank (say
$500). Immediately open an account at this same bank and deposit the
$500 loan proceeds in the account. Make your loan payments while
leaving the $500 on deposit. As time passes the bank will report your
payments to the credit reporting agencies, and youll be on your way to
building a favorable credit history.
Cl ose any j oi nt obl i gat i ons. This might be easy, or not so easy,
depending on the nature of the account and whether or not it is secured. A
secured loan is one in which the creditor has the right to repossess something
of value if you dont pay. Car loans and home mortgages are the best
examples.
Unsecur ed l oan, no bal ance. If your joint credit card or other joint
revolving account has no balance, canceling it is no problem. Just ask the
creditor in writing to close the account. You can do this on your own.

Unsecur ed l oan, out st andi ng bal ance. If your joint charge account has a
balance, the creditor wont release you from your payment obligation no
matter how politely you ask. Youll have to find a way to reduce the
10

balance to zero somehow and then close it. Here are your options:

o If you have enough cash, use it to pay off the card. Then cancel it.

o If you cant pay off the account, you and your spouse need to open
two new individual accountsone for each of you. Pay off the joint
account by transferring the outstanding balance to the two new
cards. If its reasonable to just divide the balance evenly between
the two of you, do it. If it isnt, youll need to work out an equitable
split.

o If your joint account creditor wont cooperate in transferring the
balance and closing the account, then draw cash advances on the
new accounts and use the money to pay off the joint account. Then
close it.

Smal l er secur ed l oan. If the account is secured, this makes things more
complicated because you have to decide what to do with the security
(whatever it was that you bought with the money you borrowed). If you
borrowed money to buy a huge plasma TV, the TV is the security. This
type of account always has a balance because once it is paid off, it ceases
to exist.

o If youre dealing with a relatively small loan, and you can find the
cash, pay it off. Do this whether you expect to end up with the
security (the car or the TV) after the divorce or not.

o If you cant pay off the loan, consider refinancing it. The new loan
should be in the name of the spouse who will be driving the car or
watching the TV after the divorce. This refinancing option should
be available unless the security is worth less than the amount
owed. In that case, you might have to come up with some cash to
put the new deal together. For example, if you can only borrow
$12,000 on the car and the outstanding balance on the current
note is $15,000, youll have to find $3,000 to put with the new
loan proceeds and pay off the current note.

o If its time to trade the jointly owned car, do it. Make sure only one
of you signs the loan for the new (or replacement) vehicle.

11

What about t he mor t gage? This is by far the toughest loan problem to
solve. Usually the balance is too large to even think about just paying it
off with cash or savings. Here are the options if your home is worth at
least as much as you owe:

o You can refinance it in the name of the spouse who will be making
the mortgage payments after the divorce. Its possible that your
current bank wont agree to a refinancing with only one borrower,
so be prepared to find another source of financing. A good way to
approach this problem is to find a reputable mortgage broker,
explain your objective, and let the broker shop around for a new
lender for you.

o You can sell the home and pay off the mortgage. This can be very
difficult because unless youre in a very strong sellers market, you
cant control the timing. You might be forced to move out before
youre ready, or you might find that you still own the property long
after the divorce is final. Regardless, if you cant refinance this is
the only way to protect yourself against the possibility that your
spouse might later fail to make the mortgage payments.

o Not e: Whatever you do, dont agree to deed your interest in the
home to your spouse unless your name comes off the loan contract
at the same time. There have been cases in which a husband has
deeded his homestead interest to his wife believing that in so doing
he absolved himself of any further obligation to pay. It doesnt
work that way. The deed identifies only who has legal title to the
property, not who must pay the mortgage. Its always a good idea
to consult an attorney about any deed exchanges.

Your mor t gage i s under wat er . If your home is worth less than you
owe (and many people today are in exactly this situation), this is the
worst possible scenario. The options are very limited.

o If youre current on your mortgage, and you financed through
Fannie Mae or Freddie Mac, you might qualify for the federal Home
Affordable Refinance Program (HARP).

o If youre not current on your mortgage and youre in danger of
default, you might be able to get the loan modified through the
12

federal Home Affordable Modification Program (HAMP).

o How these programs work is beyond the scope of this report, but
you can contact your lender to find out if you qualify. Even if you
do, youll both likely have to sign the new documents for the
refinanced or modified loan. From the point of view of preventing
future credit problems, all these programs will do is lower the
payments and make it somewhat more likely that your spouse will
be able to handle them after the divorce. Youll probably still be on
the hook.
What t o do i f your e i n t he mi ddl e of your
di vor ce.

If the divorce is friendly and neither of you has an attorney, you can work your
way through the necessary steps by dealing directly with your spouse. If
relations have broken down and you arent able to work together, youll have to
do it through your legal counsel. Regardless, its not too late to help yourself,
even if until now you havent done anything to protect your future credit.

You can still cancel any joint credit cards or revolving accounts that have
no balance.

You can freeze any accounts that you cant close. Even if there is a
balance, you can inform the creditor in writing that no further charges on
the account are authorized and that you want the account to become
inactive. This doesnt close the account, but it will stop your spouse from
using it.

If you freeze an account, youll then have to make sure it is promptly paid
off, or that minimum payments are made going forward. If your spouse
agrees to do this, be sure to confirm the status of the account as
necessary. If he wont agree, or if he doesnt pay, youll have to do it.
Borrow the money from relatives or friends if you must. You simply cant
afford to have the account become delinquent. In the long run a lowered
credit rating will cost you far more than it will cost to pay off the account.

As far as any home mortgage goes,

o If your spouse has the financial strength on his or her own to
qualify for a refinancing and will agree to it, thats first prize.

13

o If your spouse doesnt have the necessary financial muscle, but the
two of you signing together can get refinancing, you might want to
consider it. You should think about it even if your spouse will be
solely responsible for future mortgage payments according to the
divorce decree. The lower the payments, the more likely your
spouse will be able to make those payments and preserve your
future credit.

o Try to get any refinancing completed before the divorce is final. If
that isnt possible, consider putting a provision in the decree that
requires your spouse to cooperate in refinancing. Your lawyer can
advise you how to proceed on this.

o Regardless of any refinancing, if youll be living in the former
marital home after the divorce, you want to be free to sell it later.
You may have to sell if your spouse doesnt make the payments
and you cant afford them. This scenario will quickly trash your
credit rating, so talk with your lawyer about how best to handle this
issue. There are a couple of possibilities:

Have your spouse deed his interest in the property to you as
part of the settlement. This is the cleanest solution, and its
best for you. Failing that,

Include a provision in the decree requiring your spouse to
sign the deed when the time comes.

o Of course, you can sell the home, or apply for any refinancing or
modification programs that might be available, as already
discussed.
What t o do i f your e al r eady di vor ced.

If your cr edi t i s st i l l OK. If your divorce is behind you and youre now
single, youve still got some options if your credit isnt yet damaged.

You can still deal with any joint unsecured accounts as already discussed.
You can cancel those with no balance and freeze the rest until you can
make arrangements to pay them off. Dont forget to make any minimum
payments that might be required.

14

You wont be able to refinance as a couple, but both you and your former
spouse can seek out refinancing on any property that you separately
control. If youre driving a car that is jointly owned and financed, you can
ask your former spouse to sign over his interest in it so you can get a
new loan and take him off the hook. In exchange, hell do the same on
the car hes driving.

You want to be sure to have direct confirmation that your spouse is
making timely payments on any joint obligations that survived the
divorce. Youre entitled to copies of all invoices, even if youre not paying
them, and you should make sure you get them from your spouse or the
creditors. You also will be well advised to get a copy of your credit report
regularly (at least annually). Any problems that you might not know about
will show up there.

If your cr edi t i s damaged. If youre divorced and your credit has
already suffered, either because your spouse has been irresponsible or because
you just have not been able to make ends meet, then you need to repair it. If
you dont, it will cost you a fortune over the years to come.

If youre in this unhappy situation, then we can help you. We have developed a
step- by- step plan that is specially designed to help people like you repair their
credit. Our program includes:

Detailed guidance on how to approach creditors to negotiate debt
settlements.

Instructions on what to say to creditors and how to say it.

Educational materials and forms that you can use to learn how to budget
and manage your finances going forward.

Form letters and other documents, complete with instructions, that you
can use to negotiate and document settlement of your problem debts.

If you have poor credit because of your divorce, let us help you fix it. Youll find
our program both user- friendly and effective. Unfortunately, nothing can fix
your credit over night; but with time, using the tools that we provide, you can
make that happen. To take the first step toward improving your financial life,
please go to our website.