It can be sad, but often the best decision for everyone involved when spouses part ways. If you find yourself in this boat, you’re far from alone. There’s an oft-repeated anecdotal fact that half of all marriages end in divorce. The good news is that it’s a bit overblown. As Time reports, the percentage is actually 39 percent. The rate has dropped steadily since its peak in the 1980s.
Going through a divorce can certainly unearth a slew of tough feelings: anger, grief, loneliness, stress and more. These negative emotions are completely normal to experience for a period of time during and following the ending of a marriage.
But, what is often glossed over is the financial ramifications of getting a divorce. After all, it is a legally binding agreement that entails certain expenses to resolve. Plus, there’s the matter of separating spousal finances and even dealing with debt.
Here are some key financial consequences of divorce to keep in mind.
How Much Does It Cost to Get Divorced?
Many factors affect how much it’ll cost an individual to get divorced: these include location, attorney fees, mediation expenses and the like. According to Bankrate, the average cost of an American divorce is somewhere around $15,000. However, this amount can easily climb if there’s a custody dispute or any other type of disagreement.
Some couples end up filing jointly and cooperating to expedite the divorce. Some individuals may find their case is relatively straightforward to the point where they can represent themselves instead of hiring a lawyer. But other couples end up getting embroiled in a drawn-out clash involving paid professionals on both sides.
Divorce is a financial hardship, to be sure. In fact, enrollees in debt settlement routinely cite it as a major contributor to their financial woes in various Freedom Debt Relief reviews. Many people find themselves on the hook for steep divorce-related expenses, which can definitely exacerbate credit card and loan debt.
How Does Divorce Work with Debt?
Unsurprisingly, divorce doesn’t erase debts. The challenge instead becomes splitting them up equitably according to law. As Experian outlines, you’ll generally be responsible for any debts held solely in your name. And, in “common law” states, you’ll both be responsible for joint debts you’ve accrued. In the nine “community law” states, debt ends up getting split between the two spouses — regardless of whether it’s jointly held or carried under one party’s name.
A judge has the ultimate power to allocate assets and debts, so there’s some room for interpretation here depending on the exact details of your situation.
If you are not allocated the house you shared and are having to move to your own property due to the divorce, use a system such as MortgageCalculator.org which can help show you how much you might be able to borrow and what sort of property you could afford based on your salary and savings.
One debt-related stumbling block to keep an eye out for is the fact your credit score could take a hit if your ex-spouse misses payments on jointly-held accounts. This is why it’s a smart idea to close shared accounts as soon as possible. An ideal scenario is both spouses having the debts they’re responsible for paying put into their own names. This eliminates the possibility of two people getting a divorce affecting one another’s credit scores — plus it’s less of a headache.
Restoring Your Financial Health After Divorce
After getting divorced, it’s time to get back on your feet financially. Here are a few helpful tips from Divorce Mag:
- Revisit your spending plan and update your income vs. expenses.
- Check on your insurance policies — health, homeowners, life, etc. — and make adjustments as necessary, while also making sure you’re adequately protected.
- Contribute something to your emergency fund every month until you’ve saved at least three to six months’ worth of living expenses.
- Monitor your credit report.
- Meet with a credit counselor if you’re feeling overwhelmed by debt, or a financial planner if you want to revisit your larger goals.
It does cost money to get divorced, and you’ll likely notice some changes to your financial situation when your marriage ends. But this also presents a great opportunity to take the reins of your financial future into your own hands, so to speak.
