Financial steps to take after a divorce
Divorce is an event which causes a slump in the finances for both spouses. After divorce one fails to realize where the money was spent and how much went for the legal costs.
In order to make your finances stable after divorce, you must be prepared for the worst. Divorce changes everything for an individual from the thinking pattern to the finances and credit.
Financial steps to take after a divorce:
- Change your lifestyle: You can bring about a change in your finances when you change or alter your lifestyle. You can begin by cutting your expenses, paying down debts and limit your credit card usage. The manner by which you can cut your credit card expenses is by selling the house or the car.
- Refrain from legal battles: Long drawn legal battles, would make you spend much more than required. After divorce avoid costly litigations and settle on issues in an amicable manner.
- Know your rights after divorce: It would essential to know about your rights after divorce. You should know about your possessions, child support issues and child custody issues and more. Be certain about your rights as a parent.
- Know your retirement plans: You should be able to handle your retirement plans after divorce. Keep the interest of child in mind if there are any, not the ex. With a good retirement plan, you would benefit yourself and your children. The amount of money you save, you would always come in use at some time. If you are over 62 and own your home, you may consider a reverse mortgage. Keep at least two months pay in cash reserves when possible.
- Avoid credit issues: Avoid buying things which you really don’t require. Be more responsible towards- medical insurance, home or renters insurance, life insurance, car insurance and save where you can to avoid spoiling your credit report. Get a credit report at least once a year.
- Ensure that your credit is only in your name: You should review your credit report on a regular basis. If you find any mistakes in your credit report, take note of the mistakes and report it to the three major credit bureaus. Make sure that your spouse’s name is not mentioned in the credit report.
- Know who is liable: When you obtained credit, you and your spouse signed a contract agreeing to pay your bills. A divorce decree doesn’t change that contract. When you divorce, each of you remains fully liable for your debts. There are several ways to prevent credit obligations from making divorce more difficult and to re-establish your own distinct credit lines after divorce occurs. You may wish to consider the following:
- Communicate with your ex-spouse: Make as clean a financial cut as possible.
- Communicate with your creditors: Decide which credit belongs to whom, then ask each company and bank that extended you credit to transfer the debt to the name of the person who will be responsible.
- During divorce negotiations, keep your joint bills current, even if you ultimately will have no responsibility for the debt. If you don’t, your creditors could become more reluctant to release one party from joint liability.
- Ask the credit grantor to remove your spouse’s name as an authorized user or close the joint account to additional charges.
- If your spouse runs up large amounts of debt, you should cancel as many of the accounts as possible. Inform all creditors, in writing, that you are not responsible for these debts. This may not prevent them from trying to collect, but it does show that you attempted to act responsibly.
- Upon your divorce settlement, you and your ex-spouse might consider obtaining individual consolidation loans to cover your share of the joint bills.
- Pay off the joint bills with your individual loans and close all joint accounts. This helps ensure you'll be responsible only for those bills you agreed to pay. It also will help you establish or re-establish credit in your own name.
- Know Your Bills: If you cannot afford your monthly credit card bills, looking into a debt management plan would be wise decision. Debthelper has professional compassionate counselors to help you manage your expenses.
- Know where and on what you were spending money. Under what circumstance did you spend more money and under which circumstance were you able to curtail your expenses. Use a paper or electronic budget worksheet to track your expenses.
- Keep Informed Read more about divorce and money decisions after divorce at the Debthelper blog DivorceHelper where professionals tackle similar issues that relate to your life. Friend Debthelper.com on Facebook where you will be linked in to regular articles and issues of credit you will benefit from.