Getting What Is Rightfully Yours

Mistakes Not To Make During Your Separation

6 March 2018

Estelle Mathieu

The time between your separation and the final divorce decree can be filled with opportunities for mistakes. Dealing with the details of the divorce is undoubtedly stressful, and most of the issues are very emotionally-charged. Unfortunately, this means that financial issues can fall by the wayside, unless you are careful. Read on to learn about some mistakes you can avoid during your separation period.

Taking your credit card debts into your divorce: When it comes to marital debt, the less you have the easier it will be to deal with. Whether you live in a community property or an equitable distribution state, credit card debt usually ends up being a sore point. Don't let it be an issue for the judge to decide; deal with it beforehand and know what to expect going forward:

1. Have a legal separation agreement in place to deal with issues like this and more. This agreement forms a legal cut-off point where moving forward each party is responsible for their own part of the debt. If you live in a community property state, you might end up being 50% responsible for your spouse's spending during the separation without this agreement.

2. Pay off joint debt. In most cases, each of you will be responsible for debt in your own name, but joint debt can be tricky. Make every effort not to enter a divorce with joint debt since dividing this type of thing up can prove to be costly when a forensic accountant has to untangle the "who bought what" issue.

Seeking ownership of the family home: You may love your home and think you want it, but you should take a moment to carefully consider what that might mean to your financial future. Staying put in your family home probably means security and comfort, and when your whole life seems to be in a state of upheaval it's just a natural impulse to seek ownership of it. However, you must look at the costs associated with home ownership that goes well beyond a mortgage payment each month. Take look at other regular expenses, such as homeowner's insurance and property taxes as well as maintenance and repair costs of keeping that home and all of its systems running. If you aren't careful, you could end up owning a money pit.

Procrastinating the creation of a new budget: Your financial situation is about to undergo a big change, and to know what you need from the divorce settlement you should take a fresh look at your bills and income. The creation of a net worth statement is one way to have a handy snapshot of your financial situation, and it's not as intimidating as it may sound. It's foolish to enter into divorce property and debt negotiations without having a complete picture of your current and future budget, so perform this task as soon as possible.

Speak with your divorce attorney for more information.

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