When faced with the prospect of divorce, it’s natural to turn your attention to matters of property division. You want to know what will happen to your family home, motor vehicles, bank accounts and other assets.
While your assets are extremely important, don’t overlook the impact your debt can have on your life now and in the future. There are a number of tips you can follow to better manage debt in your divorce, including the following:
- Create a comprehensive checklist: A list that clearly outlines your debts will allow you to remain organized throughout the process. Without this, there’s a greater likelihood of overlooking debts that should be included.
- Make note of separate and joint debts: Your checklist should include whether a debt is separate or joint. For example, if your soon-to-be ex-spouse brought a personal loan into the marriage, you don’t want to be on the hook for half the balance now that you’re divorcing.
- Discuss paying off joint debts: If you’re still on speaking terms, discuss the possibility of paying off some joint debts before you enter mediation or your case goes to litigation. It’s easier to do this if you have money in the bank that you’re both willing to part with.
- Prepare your budget accordingly: Don’t assume that you’ll make it out of the divorce process without taking on some debts. It’s critical that you prepare accordingly, such as by adjusting your budget to ensure that you can meet your monthly obligations.
- Don’t take on anything you can’t pay for: For example, you may want to remain in your family home to raise your children. While it sounds like a great idea up front, it’s anything but that if you can’t afford to make the monthly mortgage payment and keep up with maintenance.
These tips allow you to better manage debt in your divorce, which positions you for financial success in the future.
The divorce process is all about preparation. When you have a clear understanding of your debts, how they’re treated and your legal rights, it’s easier to make informed decisions that will give you some sense of calm during a difficult time in your life.