Going through a divorce is tough emotionally and financially. While you concentrate on getting to the next stage of your life after divorce, you still need to keep the costs of this process low in order to move on without taking on too much debt. The expenses associated with divorce are not only tied to legal fees for lawyers but also in the debt you both may carry. Account for all credit obligations, debt, property and other marital assets between the two of you to ensure fair distribution during and after the divorce.
Here are ways to better manage your finances and debt during divorce:
Discuss Finances and Look Over Debts
Before you delve deep into divorce proceedings, consider talking about your current state of finances, including your income, assets and any money you owe individually or as a couple. Starting off with a comprehensive view of how much you both make and the debts you have will give you a better idea of how much you might stand to gain from the divorce proceedings and if you need further help paying off debts.
Although you may think the debt with your soon to be ex-spouse's name is his or hers alone, where you live will play a factor on how debt will be viewed by the courts. In some states, the debt will be owed by both parties even if one spouse didn't know about a new credit card or other account. How this debt will be split between you two will depend on how the judge evaluates your financial statements and the arguments brought up in court.
Keep All Financial Records
While you may not think that your receipts for small purchases are not worth saving, they could potentially influence how assets are distributed. It's crucial to hold onto any and all financial records that show the cost of purchases, the amount earned in income and other statements that indicate how much you or your spouse is worth. These records may be used in court and could be evaluated by accounting experts if you need to get a clearer picture of all your martial assets.
Decide If You Need a Forensic Accountant
While a serious discussion of finances will give you an overview of what you need to prepare for during the divorce process, you may need to dig deeper in order to know whether all assets have been accounted for. During marriages where one spouse may make more than the other, one spouse may try to hide the total worth of finances from the other. In this case, those going through a divorce should consider hiring a forensic accountant who specializes in inspecting financial statements and finding inaccuracies or irregularities that could indicate that something is not right with how assets are reported.
By hiring a professional forensic accountant, you can determine whether any assets were hidden from you or had their value underreported. In this way, you can find the correct worth for assets you may be entitled to during the divorce.
Look for the Right Divorce Attorney
The cost of an attorney specializing in divorce could be higher than other specialties. According to Nolo.com, the average cost of divorce attorneys is $250 per hour. With the lengthy proceedings for divorce, couples can easily rack up thousands of dollars in legal fees. It's important to look for divorce attorneys who are not only good at their job but are affordable depending on your financial situation.
Seek Out a Compromise for Joint Debt
While you could bring up marital debt with your partner in court, it may be beneficial to bring up this topic together in private and establish a compromise. This is often seen in the case of joint credit card debt. The party responsible for credit card debt may depend on who signed for the credit card. Both parties could have money owed if they were co-signers. One spouse could also be held responsible for debt incurred by the other partner. To address credit card debt you both owe, you could cancel any joint credit cards in order to put them in your own name.
Determine How You Will Pay for Your Debts
Whether you believe money awarded during the divorce settlement will cover the costs or not, you and your spouse should have a plan for how you will pay for your debts. Like debt, states also differ in how courts look at dividing assets. Known as equitable distribution, courts attempt to divide marital assets, such as property and financial assets like stocks between the couple as fairly as possible. You could also come to a resolution with how you will use the assets decided in the divorce to pay for money owed. For example, if you own a business, you could decide to sell the company and split the money to pay off your debts.