When you’re faced with the emotional turmoil of getting divorced, part of your concern is the worries around your personal finances.
There is no doubt about it, getting a divorce will hurt your personal finances. However there are steps you can take to minimize the damage.
I have put together some tips to help shorten the pain. Here are some pointers to help you protect your finances during this period of your life.
1. Separate Your Credit Card Debts
All debt is a 50/50 split until the divorce is complete. Make sure that you continue to pay your creditors even if you can’t come to an agreement on who is responsible.
2. Remove Your Name from Your Spouse’ Cards
Make sure to call the creditors for all joint accounts and remove yourself from the account. Don’t destroy your credit cards until you have done this. It is good as a failsafe, to obtain a letter from the creditor to confirm you are no longer responsible for the debt and you have been removed. If you don’t, the bank will continue to report the debt on your credit report, even if you are only a co-borrower. This will affect your ability to qualify for new credit if your old joint credit still reports.
Your credit score plummets if your spouse is late on their credit card payments. The creditors have the right to collect from you if you are still on the credit. If you are joint on the mortgage, it’s important to try to have the mortgage negotiated in either partner’s name so that the debt attached to the mortgage doesn’t affect your ability to buy something else.
3. Close Joint Bank Accounts
Separate your bank accounts while the divorce process is going on. If you still live in the same home, keep a bank account open for household expenses only and establish auto debits with payees. You want to prevent your spouse from withdrawing funds for his or her own ends.
4. Decide what you are doing with the matrimonial home.
Get a certified appraiser, and not a real estate agent to give you a letter of opinion, of what your house is worth. We can recommend some appraisers for you. Pay the cost of the appraisal and get 2 or more reports (one for each party) to get an honest appraised value of your house. If you plan to buy the other spouse out, we can provide you with options on how to best buyout their equity while keeping your total monthly payments manageable.
5. Plan for the Future
You are about to become a one-income household. This may increase or reduce your lifestyle. To deal with the upcoming change to your personal finances, make plans for lowering your car payment, mortgage and any other large fixed payments and discover new ways to maximize your money.
Become an informed client.
I have supported many of my clients through the divorce process. It’s not just about doing a mortgage, but about managing a budget, managing your assets and reassessing your long term plans and your financial future. Often when one gets divorced, they need to re-think and revamp their plans for retirement. I will be there to help with any questions along the way