Divorce: Financial Protection and Fairness
Divorce is one of the most emotionally taxing situations a person can experience. In many cases, a divorcing couple sees the end of their relationship as a failure or, worse, a lengthy mistake. While people can argue the merits of a relationship and its value, people cannot argue the financial challenges of ending a marriage.
The average cost of a divorce in the U.S. is $15,000. Still, as shocking as that number is, it does not compare to the financial difficulties people face after the process because of poor planning. Too many people make fundamental mistakes that wind up costing them dearly.
Personal Credit Score and Shared Debt
Your financial security and future are likely the last things on your mind when thinking about divorce. Still, without a clear understanding of marital assets and shared debt, a divorce can leave you footing the bill for some hefty expenses, potentially causing lasting damage to your credit report.
Before filing for a divorce, it is an excellent idea to order a copy of your credit report from each of the three major bureaus — Equifax, Experian, and TransUnion. You can get a free report from annualcreditreport.com. Currently, you can get access to free weekly credit reports, but there is no saying how long that will last.
Reviewing your credit report should give you an idea of the number of debt obligations you hold with your spouse. Before the divorce, it is worth paying down these debts, ensuring you will not get stuck with full responsibility. While a divorce will not necessarily foot you with the entirety of a shared bill, it is possible your ex will not make timely payments, affecting your credit score in the process.
Budgets and Fair Division of Assets
The ultimate goal during divorce proceedings is to ensure that each party receives a fair share of marital assets. Budgeting helps attorneys negotiate and determine the best and most equitable split.
Therefore, you will want to track your spending and financial needs. For instance, how much do you spend on groceries, bills, and childcare? Additionally, figure out what you need for things like entertainment and clothing.
If you are suddenly thrown into divorce proceedings, you can review past credit card and banking statements to determine or estimate these expenses. Additionally, keep in mind that your income and financial needs will help divide all marital assets, including debt.
Mistakes and Amicability
Divorce, especially when contentious, can bring out the worst in people, resulting in costly mistakes. For instance, if you are furious with your spouse for filing, you might not want to take or touch anything coming from them, including spousal support. Avoiding support can result in financial struggles for you and potentially your children.
Additionally, if you are angry, you might attempt to take revenge by selling your spouse's belongings or lying about your situation. You have to remember that a divorce is a legal proceeding, and being intentionally deceitful or manipulative can result in significant financial and legal penalties.
Whether you want the divorce, the best way to approach the process is amicably and professionally. If you and your spouse can behave with compassion and respect, the divorce will likely result in a fair separation of marital assets and debt obligations.
Divorce is never easy, and it can sometimes come as a surprise. Still, entering the process with an open mind and eyes will often result in financial protection and fairness.