Going through a divorce and property division of a marriage is difficult financially and emotionally. Sometimes individuals going through the property division phase of divorce can confuse their emotions with solid financial decisions. In this post and the next we will discuss seven mistakes to avoid during property division and after the divorce is concluded.
The first money mistake to avoid is ignoring who is responsible for which account. Even though a divorce decree may state that one individual is responsible for a particular account, if the account or debt has both individuals' names on it, the creditor will look to both individuals for payment. The solution, when possible, is to erase all jointly held debt and close all accounts with both names.
The second financial mistake to avoid is not recognizing a new budget situation. If one former spouse relied on the other for income during the marriage, that ex-spouse's budget will likely be affected. As the amount of income decreases, so too must expenses. In situations where former spouses are not able to turn down the expenses, the expenses are placed on credit cards which create new debt.
Often, divorced parents can find themselves in situations where they want to continue to provide the same standard of living to their children after the divorce even though they may not have the same resources as during the marriage. While there is nothing wrong in trying to provide the best lifestyle for children, parents should be aware of the financial choices they make.
The third financial mistake to avoid concerns neglecting documents concerning property. Regularly, married couples own a home together and one of the individuals retains the marital home in the property division. If one individual is awarded the rights of the marital home, the legal documents concerning the home should be updated including mortgage and loan documents. A missed mortgage payment by an ex-spouse can spell credit disaster for the other whose name remains on the mortgage.
Next time we will discuss the remaining four mistakes.
Source: FoxBusiness.com, "Seven big post-divorce money mistakes," Erica Sandberg, 6/9/11