If it’s amicable, consider collaborative divorce. Going the traditional route of “fighting” through a divorce with dueling pit bull lawyers ends up being ridiculously expensive, in both emotional and financial cost. A growing trend among couples determined to end their marriage with respect not rancor is to opt for a collaborative divorce process. You still both have your own lawyers, you still have to figure out who gets what, but everyone’s goal is to reach agreement, not continue to battle. You can learn more at the International Academy of Collaborative Professionals. An ancillary payoff is that collaborative divorce can often cost a fraction of a litigious process.
All joint debt must be separated. It’s not enough to decide who “gets” the house and who will be responsible for paying off the existing credit card debt. If you fail to formally change the ownership of your jointly acquired debt—say a house after a divorce -- both spouses will remain legally responsible for the debt long after the divorce decree is in place. For example, if you give your ex the house, but you stay on the mortgage and title, if she falls behind in the payments after the divorce you are still legally liable, and your credit score will be impacted as well. The crucial step here is to make it a part of your divorce settlement that any debt will either be paid off, or one spouse will refinance the debt into his or her name only. In the case of a mortgage, if the spouse who will receive the home in the divorce can’t qualify for a refinance based on her own income and assets, the best move is to sell the home and then both parties can start -fresh. There’s no denying that’s a hard call; especially if you have kids and you want to give them as much continuity as possible. But what will be harder is if you don’t separate your joint debt and your ex-spouse trips up and you take a fall as well.
Focus on what’s realistic going forward. The hardest, and yet most liberating, financial step in divorce is to make a clear-eyed assessment of what will be affordable once you separate. Expenses that were indeed affordable when you were married may simply not be realistic now. Yet what so often happens is that individuals are slow to recognize that they need to do some budget trimming; so credit card debt begins to rise, or important savings are put on hold. That just makes a hard situation more difficult. The sooner you take an honest accounting of what is now affordable in your new post-marriage life, the faster you can move forward, rather than dig a deep hole full of money stress.
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