Yahoo Finance How to protect your finances if you're going through a divorce
New figures have revealed that two in five people get divorced before their 25th wedding anniversary, while one in 10 split before the seven year itch sets in. If you’re facing a divorce, it can be hard to imagine it will be anything other than a disaster for your finances, but there are some steps you can take to protect yourself.
It can feel impossible to make sensible plans for the future while so much is uncertain, but you can’t afford to wait — you need an emergency budget.
People often run up debts after a split, because they’re dividing the same income between two households, while at the same time paying for what can be an expensive process. It makes sense to draw up an emergency budget to cut your expenses as much as possible during these first difficult months.
Unfortunately, you can’t make all your plans alone, because there are some things you will need to agree with your ex-partner. This can be easier said than done, because if you could see eye-to-eye, you might have less of a reason to split.
Mortgages
When it comes to the mortgage, it’s worth giving it your best shot. If you’re both named on the mortgage, then you’re both liable for the full amount, so to protect your financial position you should try to maintain payments in the short term.
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If possible, try to agree this between you. If your ex refuses to pay their share, or you’re struggling to pay yours, talk to the mortgage company and see if they will allow you to pay interest-only for a period, or take a break while you sort something out. It will have an impact on your credit score, but not as much as simply missing payments.
Joint accounts
If you’re being paid directly into a joint account, arrange for the money to be paid into a separate account in your name alone.
Then if there are bills, rent or the mortgage coming out of the joint account, they need to be paid from your own account — or that of your ex-partner’s.
If there’s no money owed on the account, and you both agree, the easiest thing to do is just close it.
If you can’t close the account, and you’re worried about your partner withdrawing cash or running up debts during the split, tell the bank and they can make arrangements so you both have to agree to any money being withdrawn. Similarly, they can place controls on debts to prevent either of you from abusing joint arrangements.
Credit cards
There’s no such thing as a joint credit card. If you both have a card on the same account, one of you will be the primary card holder, and the other has an additional card.
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If you’re the primary card holder, you’re liable for spending on both cards, so it makes sense to close your account and let your ex know.
Next steps
Once you’ve dealt with the immediate priorities, the next step is to get to grips with the value of what you have. The divorce process involves dividing your assets, so you need a firm understanding of everything you both own.
This includes pensions. In many cases, it’s one of the largest assets built up during the marriage, so take your time to go through everything, and consider getting an independent valuation to make sure you have the full picture.
The process isn’t easy. Right now, life is so expensive that one of the reasons the divorce rate has fallen to its lowest in over 50 years is that couples can’t imagine being able to afford life on their own. It means that those who are going through it need to pay real attention to money matters.
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