Preparing To Be Financially Stable After A Divorce
One of the goals after a divorce is to eventually be free and clear of debt. The sooner the better. That’s why it’s critically important to take care of and resolve all of your debt obligations before the divorce is finalized. There no worse feeling than going to apply for credit to buy a car or house and to find out that your former partner’s debts are still listed on your credit report and is preventing you from getting a loan.
The next step, of course, is finding out what what you owe by documenting all of the household debts in one place. If one person is mainly responsible for keeping track of the finances, it’s entirely possible that the other person has no idea of the amount of debt that is involved. If you’ve kept a budget, this will be a lot easier. The easiest way to do this is to enter all of your debt obligations into a simple spreadsheet. This includes ongoing daily/weekly expenses such as food, rent, travel, etc. On a separate sheet list your long term debts – such as mortgages, home equity debts, home repair loans, and so on.
If the money is available, after taking into account the tax situation of course, all debts should be settled before the divorce is finalized. If this isn’t possible, a fair solution would be for one person to take responsibility for a larger share of the debt in return for receiving a greater share of the assets. Contrary to what most people think, arrangements of this sort can usually be achieved without a great deal of animosity. Start the process of disentangling your joint finances immediately. Cancel all joint credit cards as well as other joint loans as soon as possible.
The important thing is that by the time the divorce takes place each partner has a list of debts for which he or she is solely responsible for and that neither partner is responsible for any of the other partner’s debts.
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