Three Financial Mistakes To Avoid During Divorce

24 April 2017
 Categories: , Blog

One of the most difficult parts of divorce for many people is splitting up the financial records. Even if your divorce is relatively amicable, it's vitally important that you approach the financial aspects realistically and logically – allowing emotion to rule can set you up for a money disaster later. The following are three mistakes you don't want to make at this juncture.

#1: Confusing equal with fair

Many couples, especially those splitting on amicable terms, err towards an equal division of property. Unfortunately, this is rarely fair or realistic. If one partner is the primary custodial parent of the children, for example, then the financial division may need to be favor them over the noncustodial parent simply because the custodial parent is likely to have higher expenses. Also, when it comes to property, splitting it exactly in half can also be unfair. For example, one partner may make drastically less than the other, which means they may not be able to maintain the vehicle they receive in an even split. Instead, it may make more sense to take on the vehicle that will cost less to maintain even if it isn't an equal split.

#2: Keeping the family home

This mistake is most often made when there are children involved – the custodial parent simply doesn't want to rip the kids from the family home. If the custodial parent cannot realistically pay for the house or maintain it, then it needs to go. Selling it and splitting the proceeds is the usual way to handle the liquidation of a large asset in a divorce, but a fairer division may be to allow the custodial parent a bit more of the proceeds so they can settle the kids into a more affordable living arrangement. This is something you will need to talk out with your ex, with the help of your lawyers.

#3: Leaving unpaid debts on the table

Any debt you and your ex incurred together is the responsibility of both of you. Although the final divorce decree may say that you only have to pay a portion of the debt, if your ex defaults the lender may be able to still come after you for payment. The best option is to pay off all debts, but this is rarely realistic. Instead, legally switch the name on the debts to match the divorce decree. For secured debts like a mortgage or car loan, you can usually just remove the name of the spouse that isn't considered responsible for the debt, or refinance in only the responsible party's name. Unsecured debts, such as credit cards, are a bit trickier. For these, consider getting a loan or card in just your name and transferring the balance you are responsible for to this new line of credit. Your ex should do the same for their portion.

For more help, contact a divorce attorney in your area such as Moore Robert G Attorney at Law.