Protecting Your Post-Divorce Financial Health

October 19, 2012

Protecting Your Post-Divorce Financial Health

Divorce is emotionally trying, and it can be financially devastating. Following unexpected medical bills and job loss, divorce is one of the leading causes of personal bankruptcy. It may not be possible to completely prevent a divorce from having an economic impact on the parties, but there are steps that can lessen the amount of financial harm from the breakup of a marriage.

Economic Woes in an Emotional Time

There are some obvious reasons why divorce causes short-term financial issues, particularly since divorcing couples must now fund two separate households instead of just one. Paying additional costs for housing, utilities, property insurance, food and even gasoline can tax the parties involved. Additional short-term housing costs are associated with security deposits and application fees. These costs are amplified if children are involved, particularly if custody is shared between both homes.

Another short-term effect of a divorce manifests as joint accounts are closed and individual accounts are opened in each spouse's name. That effect will extend into the long-term as credit scores fall, which can mean higher interest rates on everything from new homes to new cars and small business loans to education financing.

There are also legal fees and court costs to consider during any contested legal proceeding.

Taking Steps to Minimize the Impact

Even though some costs associated with divorce are inevitable, that is not to say that there is nothing that can be done to minimize the financial impact. In fact, a few simple steps before the proceedings begin can have a dramatic difference in the economic consequences.

For example, paying off joint debts before the divorce is finalized will prevent one party from being "on the hook" for debt that the other party is solely responsible for.

Keeping a steadily increasing savings account is another pre-divorce practice that can help bridge the gap between a single household and the cost of two; a padded savings account can cover short-term housing costs and pay for deposits necessary to get a second household ready to go.

If you are involved in a divorce -- or you anticipate that you will be involved in one -- seek the advice of a Board Certified family law attorney. Board Certified divorce lawyers know the way to best proceed to minimize the financial consequences you endure during the breakup of your marriage while maximizing the chances of a successful outcome. Board Certification is the highest rating of the Florida Bar for competency and professionalism. Only Board Certified attorneys may represent themselves as specialists or experts.

Article provided by Curtis R. Cowan, P.A.
Visit us at www.curtcowanlaw.com