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The Effect of Past-Due Alimony

If you are in arrears on alimony or support payments to an ex-spouse, be assured that credit reporting companies are being made aware of this. Any time you decide to make a major purchase, your credit will be “run.” And this past-due amount will appear as an unsatisfied debt. This hurts your overall credit score, and, as well, you cannot purchase a home unless this back debt is paid off in the deal. So, anything you can do to get this debt paid will assist your overall credit-worthiness, as far as potential creditors are concerned.

Including Alimony in Debt Consolidation

Usually, when you apply for a debt consolidation loan, the “advisor” will take a close look at all of your debt, determine how much you need to borrow, and what the payment will look like. Once this advisor has all of the information about your debt, he/she can advise you on what to include in the consolidation loan and what to leave out. Past due alimony is certainly optional on your part, but a good debt consolidator will probably advise you that, if you are unable to get this paid up, it would be a good idea to include it. Reasons for inclusion are as follows:

If you income is such that you cannot afford to make up these past due amounts along with your current monthly debt, there could be serious consequences. Your ex-spouse could file for court action, get a judgment, and assets could be frozen or taken. This, you do not want. As well, the judgment appears on your credit report, and it is a big negative when potential lenders are looking at your credit report for purposes of loaning you money for anything. As well, potential landlords do not like to see judgments on credit reports, unless they have been satisfied (paid off).
You want to being with a fresh start, eliminating all current debt and obtaining a monthly payment which is lower than your debt payments combined. Adding your past-due alimony wipes out that debt, and your credit rating will be affected positively. Plus, you will not face the potential of court judgments against you.

The Downside

Usually, past due alimony does not have interest tacked onto it. Whatever is past due is the exact amount you owe. If you include your past-due alimony in a bill consolidation loan, you will now be paying interest on that debt, and payoff will take a longer time period. As well, you are still responsible for current alimony payments, as determined by the court during the divorce, so just paying the past-due will not relieve you of this obligation. You have to decide if rolling the past-due amount into a consolidation loan is a good thing for you. If it is the only way to get current on alimony, it is probably wise to do so. You will pay more in the long run, but your credit score will be much better as well, qualifying you for lower interest rate loans on other things.