Divorce can be a very stressing time, and can make even the most level-headed person lose themselves in a whirlwind of emotions and confusion. Clouded judgment can lead to some very bad financial decisions during divorce, including depression fueled frivolous spending and increased legal fees due to unnecessary litigation. Whether you’re preparing for divorce, or have already filed and are in the midst of your action, it is important to keep your finances in mind.
KNOW YOUR FINANCIAL SITUATION
Are you the primary breadwinner? Do you pay the mortgage or household bills out of a joint bank account? If there is any marital debt, how much is owed and to which lenders? Being in the dark about marital finances can be incredibly harmful to your divorce case. Maintenance, child support, and equitable distribution are all decided based on the income and assets of each party, and not knowing about your financial situation can result in lower support payments or unfair asset distribution.
Using a financial checklist to keep track of financial accounts, liabilities, and insurance and property information will help make the divorce process easier. Having a clear knowledge and understanding of your assets and debts is one of the best ways to prepare for a divorce proceeding.
ADDRESS JOINT ACCOUNTS
All marital accounts needs to be addressed during divorce, which typically occurs during equitable distribution. Either bank accounts will be closed, or one spouse will give their ex a portion of the funds and remove their name from the account. Marital debts are also settled during equitable distribution. Home mortgages, joint business ventures, and other loans will also need to be closed, transferred, or otherwise converted during divorce.
Building a single financial portfolio during divorce is essential to rebounding after your case is finalized, so it is recommended that you open your own checking and savings accounts as soon as possible.
PLAN AHEAD FOR YOUR POST-DIVORCE LIFE
Whether downsizing your home, or splurging on a post-divorce vacation, it is important to think ahead and develop a plan of action to replenish and maintain your finances after your case is settled. Working with a financial planner can be very helpful when it comes to planning for your future.
Going through a divorce is one of the biggest life changes a person can make, but it can be a positive experience. Recent divorcees have the opportunity to start anew, which often includes fulfilling a goal that they otherwise would not have the opportunity if they remained married. Financial planners help their clients set a budget and grow their savings, which can fund going back to college, buying a new piece of property, starting a business, or simply going on a vacation. Whatever your new goals may be, it is imperative that you plan ahead and create a financial cushion.
REBUILD YOUR CREDIT
In addition to retaining the services of a financial planner, you must actively work towards rebuilding your credit if it took a hit during your marriage. Unpaid marital debt and refinanced mortgages can lower credit scores, which makes it harder to secure loans for major purchases, such as a new car or home. A low credit score can also mean higher interest rates on mortgages, leases, and new credit card accounts. This makes it harder to save money and create a nest egg.
Raise your credit score by paying off outstanding debts, closing joint financial accounts, and consolidating loans. Some divorcees benefit from consumer credit counseling.
HIRE A DIVORCE ATTORNEY WITH A FINANCE BACKGROUND
Your lawyer should be well versed in matrimonial and family law, but they should also have an understanding of the financial aspects of divorce. Attorney Perskin’s background in economics allows him to provide comprehensive representation New Yorkers struggling with complicated financial divorces.