Divorce can be financially devastating. Here are some common financial mistakes and ways to avoid them.
- Failing to prepare budgets for two households.
Two can live cheaper than one. Divorcing parties now have to pay for two households. Over ninety percent (90%) of the time divorcing parties fail to adequately budget for the expense of maintaining two separate households. Be sure to prepare and compare these two budgets.
- Can you afford to maintain the family home?
Often parties cannot afford to maintain the family home and a second home. Both parties may be required to “down size” after divorce.
- Failing to pay creditors.
Divorce does not terminate liability for debts acquired during the marriage. Creditors are not parties to the divorce and debts owed to them are unaffected by the debtors’ choice to change their domestic status. Divorcing parties are legally obligated to pay creditors during divorce proceedings. Failing to stay current on payment of community debt obligations will adversely affect credit ratings.
- Selling marital assets.
Courts equitably divide community property between the Parties. Upon filing for divorce, the court issues an order forbidding either party to sell, transfer, conceal or otherwise dispose of marital assets.
- Canceling or changing health insurance.
Upon filing for divorce, the court orders that both Parties not cancel or change health insurance. If you cancel your spouse’s health insurance, a court may find you in contempt, resulting in fines and additional costs. You must maintain current health insurance for your spouse until the divorce is final.
These are only five (5) of the many financial mistakes made during divorce. Knowledgeable counsel can assist in avoiding financial mistakes.
- Lisa L. Monnette can be contacted at (480) 704-0777 or [email protected].