When a couple decides to get a divorce, financial planning is a must. Living apart is generally much more expensive than living together, and financial matters can be extremely complicated after divorce. The same paychecks that were used to run one household during a marriage will have to stretch to financially cover everything in two households after a divorce.
After the decision has been made to divorce, a couple must make important financial decisions fairly quickly to avoid the divorce from becoming a financial nightmare for both parties.
Financial experts say that even before filing for divorce, financial matters such as joint credit accounts should be examined. During a marriage, like it or not, the credit and financial histories of the husband and wife become intertwined. When the couple decides to divorce, it can be difficult to separate financial matters without causing damage to credit scores.
Whether a couple goes through divorce mediation to work out the financial issues or has a judge decide it for them, a divorce decree only goes so far.
When a financial divorce settlement is reached or a division of debts and assets is ordered by the court, each party in the divorce is assigned financial responsibilities. If one party has agreed to or been ordered to take care of payment on a joint account and fails to do so, there can be consequences for disobeying a court order. Financially speaking, the divorce decree does not help a divorced person avoid damage to his or her credit score when bills are not paid on time.
On joint accounts, both parties remain legally responsible for the debts and can get into financial trouble when the person ordered to pay doesn't. Divorce cannot remove financial responsibility for a debt. While a family court order may say a person is not financially responsible for repaying a debt, he or she will remain legally bound to the original financial agreement that was signed in order to obtain the credit or loan. That means that even after divorce, an ex-spouse can do financial harm to both parties' credit scores if financial matters are not handled responsibly.
Aside from the credit pitfalls of divorce, there are many other financial issues to consider.
In some divorce cases, alimony is a financial issue that must be decided. Alimony payments are a complex financial matter and best discussed with a local divorce lawyer before any financial arrangements are made.
Child support is a financial issue in many divorces. Who will pay, how much and how the payments will be delivered are all matters that must be decided. The amount of child support paid and who will pay it is usually decided using a complex formula that takes into account the amount of time each parent spends with the child or children, the financial status of each parent and other factors. The child support guidelines vary from state to state.
Legal fees are another financial aspect of divorce. Generally the court will make a determination as to whether or not each party will be responsible for their own legal fees, or if one party will be responsible for paying all or part of the other party's legal expenses during the divorce.