Important! - Covid 19 update: Please read before you contact us.

Dealing with Financial Problems After a Divorce

Managing Financial Issues After a Divorce

Getting divorced is certainly an emotional time and it can be quite devastating. However, divorces don’t just affect emotions. There are also many financial problems that could arise after a divorce. This is a very stressful and dramatic time in your life, but it’s important to consider how your divorce will affect your finances while still being aware and coping with the impact on the rest of your life.
Here are a few potential financial issues that could come up during or after a divorce, and some guidance on how you may wish to deal with them.

Dividing Property and Assets

When you get divorced, you’ll too determine what you own, both individually an as a couple. This means you’ll need to collect copies of all your financial statements and make a list of what you own, what your partner owns, and what you own together. You may have signed an agreement before you got married stipulating how to divide your assets in the event of a divorce, but if you didn’t, you’ll have to work something out now.
One of the most important things to handle quickly is any joint accounts, such as joint bank accounts. You may wish to close these accounts right away, or you might choose to keep them open for a period of time. This will depend on your circumstances and it’s a good idea to have assistance from a lawyer at this point.
The same is true for joint credit card or cards that have one spouse as a secondary user. If these accounts are left open and one spouse isn’t removed as an authorized user, they will still have access to the account.

Dealing with Debt

It’s a common misconception that one spouse immediately becomes liable for their partners debts. This worry is especially strong in cases of divorce. However, the reality is that a person is not automatically responsible for their spouse’s debt just because they are married. This also means that you’re not necessarily responsible for debts in the case of a divorce.
However, joint debts are the responsibility of both people in a couple. Examples of joint debts are mortgages and bank loans taken out as a couple. With these loans, the money is borrowed by both people in a relationship. Both names appear on the loan documents and, therefore, the lender is able to request payment from either partner. Another similar situation, as mentioned above, is a joint credit card or a card that has one spouse listed as a secondary user.

If you and your spouse owe joint debts, you will need to determine who will make the payments after the divorce. If possible, pay off the debts right away to avoid dealing with this issue going forward. However, if you and your former spouse are not able to do this, you will need to come to an agreement for how these debts will be paid. You could choose to share responsibility for the debts equally, one partner could agree to take more responsibility for the debts in exchange for receiving more assets in the divorce, or the two of you may come to a different arrangement. As with dividing assets, it is often best to work with a legal professional when dealing with joint debts in a divorce.

Planning Your Financial Future

Getting divorced can have a significant impact on your financial future. Depending on how your assets are divided, you may wind up with less money in your bank account than you planned to have at this point in your life. This could affect your plans going forward and cause you to have to put more money into savings each month to reach your financial goals.
A divorce can also affect your monthly budget, especially if your former spouse significantly contributed to the family income. Losing their salary could make it more difficult for you to make ends meet.
Another potential financial issue is that it’s often more expensive to live on your own than it is to share expenses with a partner. Everything from housing costs to monthly utility charges will now be 100% your responsibility, instead of being shared between two people.

All of these possible issues mean that you’ll need to sit down and work out a new budget. There’s a good chance that you’ll need to adjust your lifestyle so that you can afford your new monthly costs on your solo salary. Think of which expenses are your biggest priorities and try to make those fit under your budget. You’ll likely need to make sacrifices somewhere, at least temporarily, to make things balance.
You will also want to get a copy of your credit report as it will be important to know where you stand at this point in your life.

Getting Professional Help

If you’re finding yourself struggling financially following a divorce, you may wish to get a licensed professional to help out. This is especially true if you are in debt or having difficulty making ends meet. If you’re feeling overwhelmed by expenses or debt, there are options out there that can help you. Depending on your financial situation, there could be numerous things that you can do. Speaking with a licensed professional can help you understand the options and choose the one that is right for you.