5 Ways To Numb The Financial Pain Of Divorce
Ease the Financial Sting: 5 Tactics to Alleviate the Pain of Divorce
Whether it comes before or after the papers are signed, economic
hardship is all too familiar to many couples who divorce. Following a few
financial guidelines can ease the burden during this difficult time.
Each year, 1 million Americans divorce. More than 80 percent of
divorcing couples cite “debt and financial distress” as the primary factor in
the dissolution of their marriages, according to an American Bar Association
survey, and studies find that most families suffer…
Whether it comes before or after the papers are signed,
economic hardship is all too familiar to many couples who divorce. Following a
few financial guidelines can ease the burden during this difficult time.
Each year, 1 million Americans divorce. According to an
American Bar Association survey, more than 80 percent of divorcing couples cite
“debt and financial distress” as the primary factor in the dissolution of their
marriages, and studies find that most families suffer a financial decline
following a divorce. By taking steps to protect credit, families can come
through in much better shape. Bills.com, a national consumer finance portal,
encourages divorcing couples to take the following steps:
1. Accurately assess debts and liabilities. First, see
yourself as your creditors do. Online (see http://www.myfico.com )
or by phone, you can request a “tri-merge” credit report (a summary from all
three major credit reporting bureaus). Not all of your existing shared and
individual liabilities. Settle (or get a judgment) on how you’ll allocate these
responsibilities.
2. Plan how to handle your home. If you own a home, the
mortgage is likely your most significant monthly payment. Be certain you
understand how you’ll resolve monthly mortgage payments, and how you’ll divide
the home’s value—whether one partner buys out the other now, or the home is to
be sold after the children are grown.
3. Budget for payments. Create a detailed budget, based
on your new income level, and 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 — starting with under $100 — then pay off loans and unsecured debt, such
as credit cards, beginning with the account with the highest interest rate.
4. Make sure your ex-spouse is making his or her
payments. If possible, make provisions in the divorce agreement for reporting
on the 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 allocated through the divorce proceedings.
Call all creditors for shared 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.
Remember that for jointly held credit cards, and for any other debts incurred
during the marriage in community property states, you have shared
liability — and thereby share any potential negative credit rating impact. This
means that if your spouse does not make payments after the divorce, it could
come back to haunt you—and your credit rating.
If you owe back taxes, be aware that the IRS does not
have to honor a decision from a divorce judgment. Consult a tax expert to help
with your divorce tax planning.
5. Focus on rehabilitating your credit and financial
health. Begin a savings plan. Reinvest any proceeds or equity that come out of
the divorce proceeding, and be especially cognizant of building yourself a
retirement fund for the future.
If you find yourself in trouble during this stressful
time — in which you must make many financial decisions — seek help immediately
from a reliable, professional debt resolution firm. Be sure to investigate the
company you choose to assist you and seek out a company that operates for the
consumer, which is markedly different from credit counseling, debt
consolidation, and debt management firms.
The best place to start is by
watching this free video by marriage guru Brad Browning… he explains where
you’ve been going wrong and what you need to do to make your wife fall back in
love with you. Click here to watch the video now, before it’s
taken down.
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