Submitted By: Gregory Wagner
CDFA® (Certified Divorce Financial Analyst) and founder of SmartCoparent

Economic hardship becomes an all too familiar presence for many couples who divorce.

Being financially proactive, and following a few tips, can ease the burden during this difficult time.


While divorce rates are on the decline, over 1 million Americans still divorce annually.  Studies find that most families suffer a significant financial decline following a divorce. By taking steps to protect credit, families can stand on sturdier financial ground. Moiety encourages divorcing couples to take the following steps:


1. Gather Your Info

Accurately assess and account for all of your debts.  Knowing your credit score before, during and after the divorce process is critical. It will determine how much you can borrow if you need it. You can check your credit score for free at Make a list of all of your individual and joint liabilities (credit card, car loans, student loans, mortgages, home equity loans and revolving credit accounts) as soon as possible. It’s critical that the responsibilities of each of these accounts be allocated clearly during your settlement.


2. Think Carefully About The House

Plan on how to handle your home and property taxes. If you own a home, the mortgage is likely your most significant monthly payment.  Also, assess how you’ll divide the home’s value – whether the house is to be sold immediately, or if one partner buys out the other as part of the settlement, or if the home is to be co-owned and sold after children are grown.

If you plan to keep the home, be certain you understand how you’ll resolve the monthly mortgage payments, taxes, repairs and utility payments. Owning a home that fits your new budget is key. Remember, children don’t usually get attached to a home as much as the parents do.


3. Budget Your New Payment Schedule

Create a detailed budget, based on your new income level, and try to use free cash flow to pay off debts. Most people find the most efficient way to pay off debts is to first pay off smaller bills – then pay off loans and unsecured debt, such as credit cards -beginning with the account with the highest interest rate.


4. Stay On Top of Any Remaining Joint Accounts

Make sure your ex-spouse is making his or her payments, especially if there are any joint liability accounts still open. If possible, make provisions in the divorce agreement for reporting on resolution of significant debt. There are important implications for you personally if your spouse does not meet his/her end of the bargain on liabilities assigned to him/her through the divorce proceedings.

Call all creditors for shared / joint accounts (credit cards, gas cards, department store cards, phone cards, etc.). Close the accounts if you are not carrying balances, or remove your name from jointly held accounts. For jointly held credit cards, and for any other debts incurred during the marriage, you have shared liability. So, you share any potential negative credit rating impact if bills are not paid (regardless of who is responsible according to the divorce decree). This means that if your spouse does not make payments to joint accounts during and after the divorce, you could incur significant damage to your credit rating.

If  you or your spouse owes back taxes, be aware that the IRS is not a participant to your divorce decree. Consult a tax expert to help with your divorce tax planning.


5. Focus on Rehabilitating Your Financial Health

Pay down expensive debt and begin a savings plan. Try to reinvest as much of the settlement proceeds that comes out of the divorce proceeding. Studies suggest that building yourself a retirement savings plan early will likely stretch your money further than if you started later – and especially if don’t have a plan.


Final Thoughts

If you find yourself in trouble during this stressful time in which you must make many financial decisions, seek help from a reliable, professional financial planner or reputable debt resolution provider. Do your homework before choosing the right provider. Unfortunately, not all companies have the consumer’s best interest in mind.



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