Society does not sit around and wait for an economic resurgence. We all continue on with our lives, striving to make our own place in this great nation and pursuing our right to life, liberty and happiness. While the first two in that list are inherent, the last one is not guaranteed. Divorce, unfortunately has become a mainstay within our family structure. In these tough economic times it can hit even harder, it is tough enough to deal with the emotional stress of a fractured family.
Main facets in people’s lives change; from friends, family, work schedule, and a general shift in perspective of one’s future. Along with the emotional trauma that comes with it a financial fiasco. This is especially true in today’s society. Some families struggle to stay out of debt while they are together. A mortgage on a house, 2 cars, kids, school, potential college tuition; all these things can leave a family in debt. So when a divorce happens and the finances are separated, it can have disastrous implications. What can you do to help avoid falling into the trap that many Americans find themselves? Here are some tips.
Should we, shouldn’t we?
Start at the heart of it. Should you get divorced? Are you doing the right thing? No one is saying you have to stay together for financial reasons. Everyone has a right to truly be happy, but have you tried counseling? If your split is somewhat amicable, can it be put off until the economy makes a turn? Or until your kids are safely on their way to adulthood. Bankruptcy, debt, and divorce can be tough things to handle and comeback from at certain points in people’s lives. Can you stay together until both spouses have equal footing in trying to make a living and having a steady job? We understand this is not the ideal situation, but at some point spouses may realize that there are tough choices to be made that have nothing to do with being in a happy healthy relationship, that is just the unfortunate honest truth.
Equal negativity
If your family has some debt, can you divide it up equally in the divorce process? Again equally may not be totally 50/50 but can the debts be divided fairly so that both spouses shoulder the load and responsibility that they can handle while working toward financial freedom. If you can divide up the debts, try and do it yourself. The creditors however do not have to abide by any divorce court ruling. Even if a judge ordered you or the other spouse to jointly pay on a particular debt it will not stop the creditors from coming after whomever’s name is attached to that debt. It is much safer to transfer joint debts into individual accounts. Also make sure there are no joint accounts that either spouse may not be aware of having. Debt can be a tricky situation. Getting all of your a possible accounts in order, joint, and separate, working out joint payments on the debt and making sure you keep accurate and up to date credit reports. Keeping debt to a minimal and keeping up with payments can help divorced couples tremendously in the long run.
Sell the house
A jointly owned home can be a source of financial devastation in a divorce, as well as a hot button for financial tension and uncertainty. We discussed this in a recent blog called underwater homes and asset distribution. Families many times want to keep their home, for their children, or because they have worked hard in establishing home ownership and a family up to this point. Foreclosure and the risk of bankruptcy are often worse for the family and children in the long run, selling the house can give both spouses a fresh start. Do this jointly; a spouse should never walk away from a jointly owned property if their name is on it.
There are many moving parts in a divorce. The upheaval and uncertainty both within the family and with the finances can wreak havoc on the immediate future if certain steps are not taken. Debt is not just a divorce issue but a national issue, as we all know. Don’t put off paying off or keeping up with payments, this will only make it worse. The divorce process can be a traumatic time in a family’s life as it is. Don’t allow yourself to dig an even deeper hole for yourself by not taking care of your finances. Keep track of your credit report and do everything you can to keep up with any payments. Don’t let your fresh start be sabotaged by economic hardship.