Understanding the Financial Side of Your Divorce

Perhaps the greatest headache that pops up during a divorce is the one that stems from the financial complications of the situation. Money can cause a great deal of strife and stress in a divorce, from assets that are being contested, to figuring out the financial realities of your post-divorce life. To help you understand what to expect, plan for, and avoid during your divorce, as well as how to adjust financially afterwards, let's take a closer look at the financial aspects found in the majority of divorce proceedings.

Pull Out the Financial Documents:

From your checking account to retirement funds and wills, you need to go over every single document that pertains to your personal finances, both now and in the future. You don't want to be sidelined later on down the road with a complex situation that you're completely unprepared for, so it's best to go ahead and figure out where you stand financially and how you and your spouse are going to divide your assets. 

Take a careful look at the income you have personally, along with any debt that you're going to be responsible for, and then devise a new budget for yourself that will give you a clear picture of how you're going to have to adjust financially during your divorce. 

When you're making plans for the future, don't assume that what you're going to be seeking in a divorce court is going to be awarded to you. Plan financial strategies according to what you know for a fact you have to work with right now. Once the divorce has been settled, then you can reevaluate your finances and make more definite plans for the future.

Stay Away from Debt:

You need to avoid debt like the plague. Unless you absolutely need a loan or need to open some type of credit line for basic living expenses, stay away from loans and credit cards. You have no definite idea regarding what your financial prospects will be after the divorce, so taking on more debt is the kind of risk that's not worth taking. 

Also, if you have children and you're seeking main or sole custody of them, you're going to be jeopardizing this by accruing more debt. A child custody judge is likely to look over your financial statements and determine that you can't provide enough stability for your children based on the amount of debt you have in proportion to your income. If your spouse has a better income to debt ratio, then it's much more likely that the judge is going to place the children in his or her care.

Restructure Your Accounts:

If you have joint accounts with your spouse, then you need to go ahead and access all financial records regarding these accounts. Sit down with your spouse and go over what each of you has contributed to these accounts in order to get a better, and fairer, understanding regarding how much each of you should take away from the accounts. 

Once you've separated assets and closed accounts, then you need to set up your own individual account that your spouse has absolutely no access to. It's important to close these joint accounts so that your spouse isn't using them to get loans or make investments that have your name attached to them, thus making you jointly responsible for them.

Credit Checks and Records:

For all credit accounts you have, you need to go ahead and make copies of all applications and contractual agreements. This will ensure that no one can say later on that you owe more money to a lender or that you're responsible for more debt than you are. Also obtain a credit report so that you can be fully aware of what your official credit record says. 

Some people may find things in their credit report that they didn't realize were there, such as lines of credit that were opened during the marriage without their knowledge. This lets you know that there's an issue you need to dispute in court so that you're not stuck paying the money back.

Talk with an Attorney:

You most certainly need to go over your financial situation with an attorney and maybe even a financial planner. Your attorney can look over your financial reports and documents, and ascertain what you are and are not responsible for, as well as how you can divide certain shared assets as well as shared debt.

Furthermore, your attorney can give you the advice and expertise necessary in avoiding something that may turn out to be illegal or preventing your spouse from cheating you out of assets that you have a right to. To get the best advice, find a quality legal professional that has specific experience in family law.

 

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