Preparing Your Finances For a Divorce or Separation
It’s always difficult when a relationship or partnership that you hoped would last comes to an end.
It’s possible that the situation leaves you stressed, depressed or unsure of which direction you should take your life in now.
However, money complicates things further.
If you were living your life where you shared financial responsibilities with someone, then the financial aspects of the relationship can remain even when the relationship itself has ended.
When you are in this situation it’s important to take the right steps and not rush into any major decisions.
There are definitely potential ramifications that you may wish to avoid when you find yourself in a situation like this.
What Should You Do During A Relationship
If you are in a long term relationship, then you should make sure that you are keeping an accurate record of finances including decisions as well as payments.
This could include anything from bank statements to investments and tax returns.
Ideally, you should have a record of anything related to money that might be relevant in a potential future situation.
A lot of people don’t like doing this because it can seem like you are almost expecting and preparing for the relationship to fail.
However, this isn’t what you’re doing at all.
You’re just making sure that the worst-case scenario involving your relationship isn’t made any more difficult.
Remember, when a relationship ends money can make things awkward and more difficult than they need to be.
If you are unclear about where responsibilities start and end then it could also lead to serious damage to your credit rating.
Do You Need The Lawyers?
Perhaps not and ideally, you should be exploring ways to avoid getting them involved.
Instead, you should make sure that you are working together with your partner to deal with any issues.
This can also help you avoid some unhealthy options such as dealing with the breakup by spending more money on other areas.
This is a mistake that is all too easy to make when you are dealing with the end of a long term relationship.
If you form a great partnership, you should be able to tackle a number of issues including child support payments.
In some cases, the wounds may be too fresh.
If that’s the case, then you can arrange for a family mediator to take control here.
Remember, child support payments are particularly important because they will help support the life of your child.
They are not, as some assume, to fund the lifestyle of your ex-partner.
A key piece of advice is to ensure that you are always looking for the high ground and taking it if possible.
You need to make sure that you avoid treating your ex as the enemy because that’s probably not the case.
Relationships end for a variety of reasons but in most situations there is blame on both sides.
What About Debt?
For financial separation, debt is always going to be a key question mark.
You need to make sure that you understand the responsibilities for debts that were created during the marriage.
Remember, if you were married the debt is shared too.
This means that you could rack up a lot of debt without even realizing it.
That’s why you need to keep an open and honest connection with your partner.
You should also make sure that you close all joint accounts and then open up new separate bank accounts.
You need to make sure that you also cancel any credit cards that are in both your names.
Write to your creditors and let them know that you are now separated.
You may also want to establish a new credit account in your own name.
Be aware that every creditor has a different procedure for dealing with this type of situation.
You will need to contact them individually.
Is it Your Debt?
There may be a question as to whether you are responsible for your partner’s debts.
Remember, debts are not transferred due to the virtue of marriage.
You do not automatically have to pay the debt of your partner if it was accumulated in their name.
This is why you should always seek advice before you agree to pay debts or commit to a financial obligation.
Of course, there is nothing stopping you from splitting the bills.
However, your creditors will need to agree and they might have some issues.
Make sure that you do get an agreement like this in writing.
That way you will have an accurate and authentic record on the new agreement.
You should also not always trust the word of your lawyers.
In some cases, a lawyer may advise you to split the debt.
However, they might not have thought to check with the creditor.
If the creditor fails to agree, then it can leave you having to pay a debt that you should not be responsible for.
It could also mean that if they fail to pay their part, then your credit score gets damaged too, leaving you in a situation where you can no longer gain credit.
What Does This Mean?
Financial issues should be a key concern when your marriage ends.
You need to make sure that you understand exactly what you are responsible for and who will be paying any existing debts.
You also need to work to guarantee that you do take all the right steps here and keep your creditors informed.
If you don’t do this then it can lead to some nasty surprises further down the road.
If you need more assistance with financial separation and you already have a shared debt with your ex-partner, we can help.
Our professional team can provide expert advice on how to deal with debt the right way and ensure that you both get the relief you need.