For those contemplating divorce, it may seem that the decision to engage in divorce proceedings will unleash a torrent of issues that need to be resolved in an instant: child custody, living arrangements, asset division and career considerations. Shuttling between lawyers and courtrooms can add to the stress. If you are prepared and the divorce is amicable, however, the process does not have to be so overwhelming.
One step that you can take to reduce the number of tasks that need to be completed as you are filing for divorce is to secure your finances before your status changes from "married" to "divorced." These steps should be taken even if you and your former spouse are on friendly terms; after all, your new life will require that you close shared accounts and open a separate account. In most cases, it's beneficial to establish the groundwork for financial security before you become immersed in resolving other issues.
Completing these tasks will help you negotiate your divorce settlement better because you will be familiar with the state of your financial affairs. Depending on your financial literacy and degree of organization, you may find that some of these jobs are already completed.
1. Locate a financial expert.
Financial illiteracy prevents adults from thriving independently. If you have no experience with of filing guidelines, retirement accounts and budgeting, it is important that you locate someone familiar with monetary matters. Advisors can help set order to your affairs and determine how to allocate resources. Receiving advice doesn't have to be an expensive affair; libraries routinely host lectures on financial issues and webinars are available on the internet.
2. Organize your paperwork.
Before you engage in proceedings, it is a good idea to learn about the state your family's finances. Important documents to scour include bank statements, mortgage records, credit card bills, retirement account statements and any paperwork related to an estate plan. These files should be photocopied and secured away from the family home or a shared safe deposit box.
3. Open a separate checking account.
If you do not already have a separate checking account, now is the time to create one. Advisors suggest opening a new account in a bank that is not affiliated with your joint account. Divert your income to this account so that you can afford to pay for legal services when the divorce proceedings begin.
4. Apply for a new credit card.
Steps three and four of this list will help you to enhance your own credit score. This rating is important for securing loans at a good rate in the future. Should you need to buy a new car or lease an apartment, your credit score will influence options available to you. If you have never had a credit card in your name, a low credit score may reflect the lack of credit history. When you use the credit card to make purchases and pay off the debt on time, your credit score improves.
5. Run a credit check.
Credit bureaus recommend that adults check their credit reports at least once a year to ensure that no fraudulent accounts have been opened in their name. Equifax, TransUnion and Experian are all required to provide one free report a year. If you are concerned that your spouse's spending habits may be damaging your credit score, you can place a security freeze on your credit to prevent new accounts from being opened in your name and to restrict unauthorized individuals from checking your credit report. Should you need to open a credit card in your name, you should do so before freezing your credit.
If you have contemplated engaging in divorce proceedings, you need to actively engage in protective measures. Taking these steps will help you to determine the state of your finances and prepare for a new stage in your life. As divorce proceedings may be complex and winding, it is recommended that those struggling with the process meet with a knowledgeable attorney to determine the best path to take.