Avoid These Common Financial Mistakes in Tennessee Divorce

January 10, 2013

Avoid These Common Financial Mistakes in Tennessee Divorce

Divorce can often seem overwhelming with all of the changes that it brings to people's lives. People may be uncertain about the paths they should take when trying to start over after divorce. Often, the emotional upheaval that accompanies divorce and lack of information leads to people making poor financial decisions. Tennessee residents who are considering divorce should be aware of common financial mistakes people make when divorcing and how to avoid them.

Budgeting

Those going through divorce need to develop budgets for their changed financial circumstances. Without systematically outlining income and expenses that a person will have after the divorce, he or she will not have a clear idea of what to ask for in the property division settlement in order to be financially secure.

People also need to consider future needs, in addition to present circumstances. People should factor in what they will need for retirement when considering property settlements.

Family Home

Many couples have difficultly determining who should keep the family home, since both parties may feel an attachment to it. Some may believe that a parent who has primary custody of the children should keep the home in order to minimize disruption to the children's lives due to the divorce. However, it may not make sense for either spouse to keep the home. Houses cost money, both in mortgage payments and maintenance, and one parent may not be able to afford that on his or her own.

Additionally, a house is an illiquid asset, meaning that it is not easily converted into cash. When one spouse takes the house, more often than not he or she is giving up rights to more liquid assets such as investment or retirement accounts. Having assets that a person can quickly turn into cash when unexpected expenses arise may be more beneficial than keeping a house.

Shared Accounts and Credit

Many people overestimate the power of a divorce decree. They assume that once a divorce decree states that the other spouse is responsible for a certain debt, they no longer need to worry about it. However, just because a divorce decree states that one spouse is obligated to pay a debt, as long as the debt is still in both parties' names both parties are still liable for the debt. Creditors may still pursue payment from each spouse. People need to make sure that their ex-spouses transfer debts they must pay under the decree into their names only.

Additionally, people should check their credit reports to make sure they closed all joint credit accounts with their former spouses so their ex-spouses cannot incur more debt in both of their names.

Consult an Attorney

Divorce can be a stressful experience. People should not try to make critical decisions about complex financial matters that go along with divorce without sound legal advice. If you have questions about divorce in Tennessee, speak with a seasoned divorce lawyer who can offer you guidance about your circumstances.

Article provided by Green & Leininger, PC
Visit us at http://www.nashvilledivorcelawyer.com