Divorcing without Ruining Your Finances
Millions of Americans file for divorce each year, and the dissolution of marriage often leads to related financial crises. Your future ex-spouse can cause financial ruin, but if you follow these tips, you can avoid most financial problems.
Establish Your Own Accounts
It is vitally important for each spouse to establish his or her own credit account, preferably before your credit can be affected by defaults that could come up in the divorce. If possible, talk to each other about dividing up credit card debt and taking on your part of household debts on your personal card.
It is also essential to close joint accounts to prevent the other spouse from accumulating debt and later refusing to pay.
Sell the House
This is a big step, but a co-owned home is a major cause of financial ruin in divorces. If you let your spouse keep the dwelling and he or she does not pay the mortgage, it is your finances that will suffer if your name is still on the house. If your spouse wants the home, sell it to him or her so your spouse has sole ownership.
Make Bankruptcy a Fresh Start
If bankruptcy occurs, make it a fresh start. To truly eliminate your debts, file at the same time as your former partner, and don't use your divorce lawyer to represent you. Instead, find your own reputable lawyer with experience dealing with bankruptcy. You can also place a simple statement on your credit reports naming the bankruptcy as a consequence of divorce that could not be avoided.
Divide Up Debts
The court will divide up debts for you, but if possible, take care of this step before it gets to that point. Collectors and creditors can still demand payments from you if accounts are still in your name, even if a judge orders your former spouse to take care of a joint debt. This is another good reason to close any and all joint accounts and get a fresh start with your own accounts.
Inspect Your Credit Report
Pull your credit reports each year and look out for accounts that are unfamiliar. Your spouse likely has access to your social security number, and he or she can use that to co-sign for new accounts. Keep checking your credit report until your finances are completely separated.
If you follow these tips, you can make your separation clean and clear, and your ex-partner's financial mistakes will not burden you in your newly single life.