3 Tips For Protecting Your Finances During A Divorce
It's rare for a divorce to have no effect on the finances of the individuals involved. It simply costs more to maintain two households than it costs to maintain one, and both parties stand to suffer financially because of the split. Protecting your financial interests during the divorce process can be emotionally difficult, because it may go against your instincts to protect your finances from the person with whom you were recently sharing your finances. You may also have trouble figuring out where to start. Take a look at a few tips that can help you protect your financial security during the divorce process.
Protect Your Credit
Any accounts that exist in both your and your soon-to-be-ex's names can affect both of your credit ratings, whether you're married, separated, or divorced. Once the two of you make the decision that you're going to get divorced or legally separated, it's no longer a wise financial decision to count on the other person to make their share of any payments. You should close any joint accounts that you own as soon as possible. Notify your creditors that you and your spouse are divorcing, and request that your accounts be placed on inactive status, so that your spouse can't accrue new debt that you'll be held responsible for. Open new accounts in your name only.
Be sure to send notifications in writing, and send them by certified mail so that you have proof that your letters have been received. Ask for a current account statement to be sent to you for your records. If there are any accounts that can't be closed, such as accounts with outstanding balances, request to receive copies of every monthly statement so that you can track the payments and quickly clear up any discrepancies.
Consider Hiring A Financial Advisor
A financial advisor can help you get a clear idea of what your new financial picture looks like and help you create a budget to reflect your new reality. A financial advisor may also be able to help you find any irregularities that you may not have been aware of in your shared finances. Hidden debt – debt accrued by one spouse without the other spouse's knowledge – is a growing issue between couples. One survey found that more than 70 percent of the responding couples with incomes over $50,000 a year had money secrets.
Even if it's done without your knowledge, debt accrued during the marriage is the responsibility of both spouses. That means that you may find out during a divorce that you owe money that you were never aware of or your assets weren't as healthy as you thought they were. A financial advisor can help you figure out your options. Be sure to authorize your financial advisor to speak with your lawyer, as the details of your financial situation may be useful in divorce court.
Consider Giving Up The House
At one time, a divorce attorney might have advised you to fight to retain the marital home. While keeping the house may sound like an emotional decision, it was also a decision that made good financial sense when the housing market was solid. In today's economic climate, though, hanging on to the house isn't always the best decision.
Ask yourself if you can really afford the upkeep of the home, or whether you'd be more financially stable in a smaller, less expensive place. How much equity do you have? How difficult will the home be to sell? Don't cling to the home out of emotional attachment, or because keeping the house was considered the smartest move in the past. If the house will be more of a liability than an asset, you're better off not fighting for it.
Of course, the most effective way to preserve your finances during a divorce is to hire an experienced divorce attorney to protect your interests in court. Make sure to provide your attorney with a clear picture of your individual and joint finances so that he or she can make sure that you come out of the marriage with your fair share. For more information, visit a specialist's website, such as http://www.madisonlf.com.