After Valentine’s Day Comes the Divorce Season
The followinf are some insights from my own experience, from being a credit counselor for four years and from reading and speaking to many divorce professionals:
1. Try to stay calm, not only for yourself but also for your children. If your marriage is over, proceed as if you’re dissolving a business partnership. Keep emotions out of it if possible and treat it as a math problem. Gather all of the documentation pertaining to your marital finances. If you don’t understand what you own or owe as a couple, write your questions down and ask a professional that you respect – financial adviser, accountant, banker, etc. Your lawyer can recommend a financial professional if you don’t know any or you can check out the websites I have listed below. Just make sure you get the answers you seek.
2. In theory, assume you will be dividing everything acquired from the marriage in half. Even if you didn’t have a paying job but were taking care of the household and children you contributed economic value to the marriage. Creating a balance sheet will give you a general idea of what you own and owe as a couple and potentially what you might have after the divorce. Evaluate the assets and liabilities by category, and in particular, determine the liquidity of the different assets, meaning how easily they can be turned into cash. Hard assets can be a house, land, valuables, and examples of monetary assets are bank, retirement and savings accounts. Your liabilities can be a mortgage and car loan (secured loans), student loan, credit card accounts and personal loans (unsecured loans). If some of your accounts are in both of your names – joint accounts – like a credit card or mortgage, realize you will be on the hook for the debt if your partner doesn’t pay, even if it’s stated in the divorce agreement that one person is responsible.To change the account holder you or the lawyer have to legally split the accounts and open new individual accounts prior to the finalization of the divorce.
3. Think about your future in financial terms. Your lawyer should look out for your best interest and help you craft a reasonable settlement agreement but it’s always a good idea for you to understand and be in on the process. If you’re a stay-at-home mom and had a career before having children you may be entitled to rehabilitative alimony, meaning you can get extra money in the early years of the divorce to help you get the training to re-enter the workforce. Make sure you get a portion of each type of asset, including the retirement assets. Many women believe they should keep the house for the sake of the children but don’t factor in all of the financial costs in staying there like maintenance, taxes and insurance.
I have over 20 years of experience in the financial industry and three years ago became an Accredited Financial Counselor for a nonprofit credit counseling agency. From speaking to thousands of women across the country who were in financial trouble …