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The financial ramifications of your divorce will be significant. There is the division of property, which applies not only to who gets to keep the house and other possessions but also who will be entitled to keep other financial assets and who will be obligated to pay the debts. Then there is paying the bills and other expenses during the divorce process. Finally, you will have to figure out what your finances will look like post-divorce. It can certainly be overwhelming, but many people find themselves with serious financial problems when they fail to be proactive with their financial situation. If you are facing divorce and are overwhelmed by figuring out your finances, an experienced divorce attorney can provide whatever guidance you may need.  

Step 1: Assess Your Financial Situation

The best place to start is at the beginning – take stock of your marital financial situation. 

Tabulate how much cash you and your spouse have on hand and in your various bank accounts. You also want to add up how much money you have in investment and retirement accounts. 

Next, you need to turn your attention to the debt that you and your spouse have. Consider the monthly payments and the remaining balance on any outstanding loans, including your mortgage and car payments. You should also add up how much you owe in credit card debt. 

Lastly, try to create a basic monthly budget that accounts for your joint income and expenses. This will give you a realistic “big picture” view of your month-to-month financial situation that will be helpful later. 

Step 2: Target Your Shared Debt

If feasible, you and your spouse should work together to pay off whatever shared debt you are able to. Keep in mind that any debt acquired during the marriage will be considered “marital property” and therefore you each may be responsible for half of it. Paying it off before your divorce is final simplifies your property division and, more importantly, helps minimize potential credit issues. Discovering that your soon-to-be-ex failed to pay the bills that came due during the divorce is an unpleasant surprise for too many divorcing couples. 

Step 3: Open Accounts in Your Own Name

You want to open bank accounts and credit cards in your own name as soon as possible. One reason is that, again, it will clarify your financial situation – you will know precisely how much money you have to pay bills or sudden, unexpected expenses when they come up. It will also give you a sense of what your financial situation will be once your divorce is finalized. 

This is a very important step for spouses who have been out of the workforce in order to raise their children. Setting up your own accounts will help you establish a recent credit history, which will become very important if you later need to lease a new place to live or obtain a car loan. Beyond bank accounts and credit cards, you may want to consider setting up your own utility account or getting your own wireless phone plan. Just be sure that you keep current on the bills so that you have a strong credit history when your divorce is finalized.  

Step 4: Retain Control

You need to continue to manage your assets until the divorce is finalized. Even if you have begun to decide who will pay which debts or who will be responsible for which expenses, do not surrender total control to your spouse before your divorce is finalized. Otherwise, you put your assets and your credit at risk. 

For example, let’s say that you have decided that your spouse will keep the house, and as a result, they will be responsible for making the mortgage payments. Unfortunately, they fail to make the mortgage payments. You are unaware because you are not monitoring the account and ensuring that the mortgage is paid. The house goes into foreclosure, and you are forced to pay a significant amount of money in late fees, interest, and other fees in order to bring the mortgage current. And because the mortgage is held jointly between you and your spouse, your credit history has suffered significantly. 

Even if you are not the one making the payments, you want to do what you can to make sure the payments are being made. Other assets and debts should be similarly managed. 

Step 5: Be Frugal  

It may be tempting to engage in some retail therapy to offset the stress and frustration of your divorce, but now is not the time to “treat yourself.” Try to limit any unnecessary expenditures on things like expensive vacations or luxury items. There are two reasons for this. 

First, your spouse will likely become resentful when it comes time to divide expenses and will likely use it against you in the divorce. This can be particularly damaging if they are being frugal and you are not. 

Second, and more importantly, now is the time to save as much cash as possible. Your expenses are going to increase. You or your spouse will need a new place to live, for example, which means a significant increase in living expenses. In addition, there are often many unexpected expenses along the way, such as having to buy extra furniture and other personal items for you or your children. Lastly, you may need that extra cash to pay attorney’s fees or other expenses incurred in the divorce process. 

Step 6: Hire a Professional

While hiring professional assistance represents an additional cost, it could also be an important investment in your financial future. A financial planner or advisor can help you address complex taxation issues and liquidity needs. Getting the help you need early on in the divorce process can be very helpful for moving forward, especially for couples with complex financial situations. 

Contact a Divorce Attorney to Get the Help You Need Today

At Seattle Divorce Services, we bring calm and steadiness to what feels like an out-of-control situation. Your divorce is about more than legal documents – it’s about helping you navigate a major change in your life to reach a better future. Contact us today at 206-784-3049 to schedule a consultation to discuss how we can help you reach the other side.