When preparing for the divorce process, you’ll have many questions associated with property division.Who will get the family home? What happens to our retirement and educational accounts? How are bank accounts divided?
You get the point. Property division is sure to be at the forefront of your mind. However, alongside this, you must also consider the impact of debt on your divorce (and your future).
While no two divorcing couples face the exact same circumstances, there’s a good chance that you’ll walk away from the process carrying some debt.
Here are three things you can do to organize your finances for the divorce process:
- Create a debt division checklist: This is a list of every type of debt you have, from your mortgage to credit cards to a home equity loan or line of credit (and that’s just the start). It doesn’t matter how much money you owe, it’s critical to include the debt on your checklist.
- Separate debts by individual and marital: For example, if your spouse had a personal loan in their name when you tied the knot, you may not be responsible for any remaining balance in the event of a divorce. Conversely, if you have joint credit card debt, you’re both responsible.
- Consider the impact of property division on your future debt: Maybe you’re interested in staying in your family home as you feel that it’s the best way to maintain stability for your children. While this makes sense from that standpoint, consider the financial impact on your future. If there’s a balance remaining on your mortgage, it’s your responsibility to pay it. You must be confident that your future income will allow you to handle this liability every month.
There’s a very good chance that you have some type of joint debt with your soon-to-be ex-spouse. The way you approach it will have a big impact on your financial future, so don’t let anything slip through the cracks.
With proper organization and knowledge of your assets and debts, you can implement a plan that allows you to finalize your divorce while minimizing the negative affect on your personal finances.