Now that the holidays are over, the store and credit-card bills are starting to mount up. You could be forgiven for worrying about the bleak picture January may hold financially, especially if you have recently gone through separation or divorce. Read on for some help and guidance with divorce and debt in these tricky winter months.
Divorce and Debt: Strategies to Allay Your Financial Fears
If you have experienced a divorce, you will know how challenging it can be to get back on your feet. The emotional side is one thing, but the realization you need to potentially up sticks and move, is another. However, it is vital to maintain a positive relationship and outlook with your kids and ex.
In addition to this, you also need to think about how this affects your finances. Luckily, there are a number of sensible finance options to ease your money woes. Whether that is consolidation of past loans, reorganizing your student debt commitment (Bankrate.com also offers a guide to paying off your student loans), or how to work financially moving forward, be sure to seek advice in order to help protect yourself and your family.
And before your divorce is finalized, you might need to to establish credit in your own name. One relatively simple way to do this is to obtain a credit card in your name only, make a minor purchase every month – $30 at the grocery store or gas pumps, for example – and then pay each bill on time and in full. (For more tips about credit/credit scores, see “How to Improve Your Credit Score Before Getting Divorced“.)
Trying To Avoid Serious Post-Divorce Debt
While you were married, you could discuss your finances together; but during divorce, joint debts as well as joint assets are divided and assigned to each ex-spouse. You can find yourself responsible for paying debts incurred by your ex – which definitely adds insult to injury. One of the best ways to avoid getting trapped here is to ensure that as many loans, credit cards, and debts as possible are in the name of the person who will be incurring them. However, unless you’re just getting married and setting up your joint and individual accounts, this ship has likely already sailed.
That doesn’t mean that there are no other strategies to avoid getting stuck with your ex’s bills. The best way to ensure that their bills don’t follow you into your post-divorce life is to pay off and close all joint accounts before the divorce is final. Even if your divorce agreement states that your ex is responsible for paying off a joint credit-card account, the credit-card company is not bound by this and will come after you for payment if your ex defaults on the payments. And if your ex is keeping the house, make sure it has been refinanced with your name off the title and mortgage.
Divorce and Debt: Turning Potential Problems Into Positives
A divorce can cause one or both members of the partnership to leave the family home. While you’re busy dealing with the emotional and practical aspects of your separation, your creditors’ letters are piling up on the doormat. It may be that you are expecting your ex to be dealing with this part of the process. It may be that your ex always took care of the finances in your marriage, so why wouldn’t they keep on doing so now, right?
Even if your ex agrees to take care of the financial aspects, this does nothing to help you understand your financial situation – and in the worst-case scenario, it could allow them to “get creative” with the numbers. So you must start (or continue) keeping track of what is now your task alone. In other words, don’t neglect important documents and letters. This is one of the most common debt issues after divorce: a former couple (or one ex-spouse) neglecting the paperwork, falling into arrears, and accruing further debt. Continued failure to pay can bring about further charges, and in worst-case scenario, bailiffs. When you are looking to move forward in a positive direction, this is the last thing you need. (See this “Post-Divorce Financial Checklist” to ensure nothing falls through the cracks.)
Divorce brings about many changes, but with the right help and assistance, you can turn it around and look at it positively. Getting your financial advice and seeking help will set you on the right path to a happy, secure and productive future.
Jess Walter is a freelance writer and mother. She loves the freedom that comes with freelance life and the additional time it means she gets to spend with her family and pets.