Navigating Financial Struggles Post-Divorce: A Comprehensive Guide
Divorce can be a trying time, with overwhelming emotions and difficult decisions. It’s no surprise that many people find themselves grappling with financial troubles after a separation. But remember, you are not alone in this struggle. In fact, as per records, around 20% of insolvencies in Canada are linked to relationship breakups. Let’s explore the main reasons for this financial turmoil and discover ways to manage debt post-divorce.
Reasons for Post-Divorce Financial Troubles
Single-Income Budgeting: A Tough Transition
After a divorce, you transition from a dual-income household to managing expenses on a single income. This shift can be financially draining as you bear the full brunt of rent, utilities, groceries, and other expenses.
For Women: Women usually face greater financial challenges post-divorce. They generally earn less and are often given custody of children, which further increases their financial burden.
For Men: On the other hand, men, who were the primary earners, are often obligated to pay child support, leaving them with limited funds for their own expenses.
Whether you’re a man or woman, handling finances single-handedly post-divorce can be daunting.
Legal Expenses: A Heavy Blow
Separation doesn’t just mean severing emotional ties, but also dealing with legal proceedings which can be expensive. You must account for court costs, attorney fees, and settlements. As per a 2016 survey, legal costs can range from an average of $1,772 for an amicable split to a staggering $46,578 for a contested divorce.
Joint Debts: A Lingering Connection
In a divorce, while assets are often divided equally, debts that are in your and your ex-spouse’s name cannot be split equally. Your lenders view both parties as responsible for 100% of the jointly held debt, despite what your divorce agreement states. Moreover, any default on joint debts impacts your credit rating.
If your ex-partner files for Bankruptcy, creditors can still pursue you for the full balance.
Seeking Professional Assistance
Sometimes, the financial burden post-divorce can push you towards bankruptcy or a consumer proposal. In such cases, it’s advisable to consult a Licensed Insolvency Trustee (LIT) who can review your situation and suggest the best course of action.
Role of a Licensed Insolvency Trustee
Bankruptcy laws are complex, and an LIT can guide you through them. For instance, a bankruptcy filing does not absolve all debts, such as alimony, child support, or student loans less than 7 years old.
An LIT will review your financial status, inform you of all available options, which might include alternatives to bankruptcy like a Consumer Proposal, debt management plan, or a debt consolidation loan.
Seek professional help today and find relief to start living your best financial life. Get help today.