You might expect a divorce to impact your home and social life, but have you given thought to how a divorce can ruin your finances? If not, you are in for a nasty shock. To safeguard your finances from divorce, follow these tips.
Start with a credit check
Most couples have joint bank accounts and credit cards. Before you get divorced, pull your credit report and check for any suspicious charges. Your spouse may have taken out another credit card in your name and rung up thousands in charges. You’ll need to know this information to take steps to protect yourself. Legally, you can remove yourself from credit cards and disavow charges of which you were unaware.
Even if everything looks normal, you and your spouse will need to assign the debt and develop a payment plan, so you’ll need to be honest about the financial health of the relationship.
Open your own bank account
If you only have a joint account, open a bank account in your name only. You’ll use this account during the separation and divorce process, then thereafter.
Develop a solo budget
When you’re on your own, you’ll need to be fiscally responsible for your needs and those of any children. To relearn how to support yourself, drat a budget that reflects your income and any alimony and child support payments you will receive. By doing this pre-divorce, you reduce the likelihood that you’ll live beyond your means during or after the divorce. While the occasional splurge during the stress of divorce is reasonable, too many indulgences can leave you broke.
Inventory and assign all debts and assets
During divorce, all marital assets will be divided. To split assets fairly, inventory them. You may have assets that are strictly yours (like an inheritance you came into pre-marriage) or joint assets (the car or home you bought together). As you go through divorce, you and your spouse will still need to meet and debt obligations, including rent or mortgage payments. Together with your attorneys, determine who will make the debt payments and how the assets will be distributed to avoid any financial penalties.
When going through a divorce, an attorney can help you work through any decisions that affect your finances to minimize the impact on your life.