In addition to the emotional turmoil of a divorce, there will likely be financial stress as well. In order to get your life back on track, it will be important to take the correct actions during this time, however knowing what the correct actions are at the time can be slightly challenging.
Dealing with both the emotional and financial stress at the same time will be challenging, but you will notice when one begins to improve, the other likely will too. There are several steps to take in order to ensure that you can regain your financial feet after a divorce. Take a deep breath, collect yourself and get ready to get your life back in order.
During a divorce the judge will divide debts between the couple. While this division tends to be quite fair, the problem comes in when each party truly realizes that they no longer have the benefits of dual incomes. Hard choices will need to be made at this time, like how you will replace this lost income, and if you may need to file for bankruptcy or make other large lifestyle changes.
Organize your income and your expenses
Taking the time to put your debts and income down on paper is the best way to get a good handle on what steps you must take. If you suspect that you may be able to live up to these financial obligations, it is best to hold off on taking extreme measures like bankruptcy. There are options like taking on a second job, and cutting out expenses that are not completely necessary. These may not be pleasant changes, but they may be required in order to keep your head above water and can be a much better alternative than bankruptcy. Once you see what your income covers, it’s time to make some serious financial decisions.
Protect your credit score
Many find that their credit score declines during a divorce. You will want to do everything in your power to protect your credit rating. While bills such as utilities, mortgage, and car payments should always come first, try to pay your credit related debts next. If your credit has already suffered, all you can do at this point is attempt to restore it to a respectable number. This may take some patience and time. Also, if you have a good history of making payments on time, it may be beneficial to reach out to these companies and explain you are currently facing a financial crisis. They may be able to work with you in the short term while you get back on your feet.
Figuring out what to do with your mortgage
Your mortgage may be another concern. It is likely that you want more than anything to keep your home. However, if you see that there is no way that you will be able to make the payments, you may want to consider selling it before any type of foreclosure proceedings begin. If you are able to sell the home in advance of foreclosure, you will be able to maintain a better credit rating, and should be able to purchase a more affordable home of your own. Also, if you currently have your home insured (which you should) make sure that you compare home insurance rates to be sure you are getting the best deal while still protecting your assets. Any unforeseen emergencies can push financial instability over the edge if you are uninsured.
Being proactive with your finances is the best way to survive the negative financial aspects of a divorce. While it might not be possible to come out completely unscathed, if you take the right steps you should be able to greatly minimize the damage.
Jennifer Murphy is a financial blogger and a contributing writer for Policy Expert.