Divorce Debt Can Cause Major Financial Problems - There Are Solutions For Divorce Debt
Households that include a married couple that are both working and earning a decent income, are often able to accumulate assets and debts faster than a single individual or a family in a single income household.
When marital problems surface, the stakes are high, particularly when children, assets and debt are involved. Some instances see all of the debt in the name of one spouse (in some cases even when he or she is not the primary income earner in the household). Also, when a separation occurs, assets become tied up until the terms of the separation can be determined.
When a couple separates, both spouses will experience a major change to their financial situation. Especially if the choice is made to live in separate dwellings, at this point their cost of living will increase or even double.
In more accelerated situations, couples have already divorced and a determination has been made as to "who" will be responsible for "what" debt. In these cases, dealing with the debt for a single income family can create a harsh reality and an almost impossible situation. This is particularly true if the party who is held responsible for paying most or all of the marital debt also has to make support and/or alimony payments. This is one example of a situation where a financial restructuring may be warranted.
If things get ugly, no one wins, and this presents many challenges.
If you are in the process of a separation or divorce, you don't have to go to a divorce lawyer or attend divorce court to negotiate with your spouse. There are family law lawyers that specialize in mediation and collaborative law; they help people come to an agreement on contentious issues, without going to court.
If you are separating or divorcing, have accumulated marital debt, will not be able to pay it living independently and own a home, it will be in your best interest to find a way to work with your spouse. This could enable you to refinance joint assets such as your home, to raise proceeds to deal with debts and hire legal representation to help you and your spouse work through the separation or divorce.
One major mistake people often make when separating or divorcing, is that one or both spouses will stop paying divorce debts until it is determined "who" will owe "what". This is the worst thing to do. Even if you are having a dispute over your debts, it is important to maintain at least the minimum monthly payments on any credit that you have signed off on.
Letting your divorce debt destroy your credit will impair your options when moving forward independently. On the other hand, if you are left with debt and have absolutely no ability to pay it, you may have to seek out other options to help you deal with your divorce debt. The solution could include a debt consolidation, financial restructuring or even financial protection.
The best thing to do if you are separating, divorcing or have divorced and are dealing with divorce debt is to contact a Financial Advisor. One who will look at all available financial scenarios to come up with a strong financial strategy so you can come out of your divorce on a sound footing.
by: Michael Goldenberg, President, DebtCare Canada