Managing money during a separation
The majority of people who divorce cite financial problems as a contributing factor. Ironically, the financial problems that result from divorce may be even more severe. While it may be hard for people involved in an emotionally-draining divorce to clearly think about their money, it is absolutely imperative.
The first financial action after separation is to pull a copy of your credit report. You will want to review entries carefully and either close all joint accounts or change them to individual accounts. Alert your secured lenders of your marital status and instruct them not to allow any changes without your permission. You may also want to “freeze” joint bank accounts or divide any funds into two individual bank accounts.
Kelly Lute had only been married a short while when she discovered that her new husband had been cheating on her. "I kicked him to the curb real quick, but not before he went on a shopping spree with several of my credit cards and maxed them all out in about two days."
During divorce proceedings five years ago, the judge in Kelly's case ruled that all community debt must be split in half, but to this day she's never seen a cent from her ex-husband. It's important to remember that a divorce decree is an agreement between you and your spouse—not your creditors. The contracts you signed with your creditors cannot be changed by a divorce decree; therefore, whoever is responsible for the debt during the marriage may still be obligated after the divorce. Your responsibility will ultimately be dictated by state laws. Since state laws vary quite a bit, you may wish to discuss your rights with a reputable divorce attorney.
For Kelly, the divorce decree did nothing to stop creditors from hounding her for the massive debt her ex had created. She ended up selling her home and moving in with relatives to help relieve some of the financial pressure. "I even had to pawn some jewelry just to make the mortgage payment and buy food."
Eventually, Kelly earned her real estate license and became a realtor as a second job. The additional income, combined with the stability of a debt management plan from MMI, helped her resolve her post-divorce debt crisis and get back on track.
Every experience, however, is unique. After your divorce is final, it is wise to allow time to pass before making any major financial decisions. In the meantime, there are a few things you should do in order to move forward financially.
Locate important documents. You will need to locate important papers such as tax returns, insurance policies, birth certificates, mortgage documents, and social security cards.
Create a new spending plan. Changed circumstances call for a changed budget. Note differences in income and expenditures and adjust your spending accordingly.
Set goals. Most likely, your experience changed your financial priorities. Decide what you would like to do with your money and put a plan in place to make your goals a reality.
Finally, and most importantly, enlist the help and support of your family, friends, and community. Divorce can be a difficult, damaging process, both financially and emotionally. Don't be afraid to lean on your support network to help you make it through challenging times.
This is an updated version of an article that originally ran in 2010.