Handling Finances During a Divorce

The cost of supporting a family and managing finances can be a challenge in Williamsburg, Poquoson and other communities in the popular Hampton Roads region of Virginia. The high cost of living can put a strain on a family’s budget and lead to conflicts within a marriage. In fact, conflicts among couples over finances rank as the leading causes of couples retaining divorce law firms to end their marriages.

Couples making the decision to end their marriage may need to make changes to the way they handle finances during and after the divorce process to avoid a continuation of their money problems. It takes planning and preparation to make a successful transition into a life with only one income instead of two. Here are some tips for handling finances that can be applied during a contested divorce or an uncontested divorce.

Gather Financial Documents

People contemplating a divorce should not wait until they consult with divorce attorneys to begin gathering financial records to get an overview of what assets they have available to them and what debts they owe. Some of the documents someone should gather include:

  • Statements for all joint and individual checking, savings and money market accounts.
  • Statements for all retirement accounts.
  • Statements for all investment and brokerage accounts.
  • Statements for all credit cards.
  • Pay stubs for at least the past six months.
  • Deeds, titles and other ownership documents for all assets purchased or acquired during the marriage.
  • Deeds, titles and ownership documents for all assets acquired prior to the marriage or during the marriage as gifts from third parties or inheritances.
  • State and federal income tax returns for the three-year period preceding the divorce.
  • Balance sheets, profit-and-loss statements, and other records pertaining to ownership of a business by either or both spouses.
  • Statements of mortgages, auto loans, business loans and other indebtedness acquired by the parties during the marriage.
  • Statements of mortgages, auto loans, business loans and other indebtedness brought into the marriage by each of the parties.

A review of the documents provides the information people going through a divorce need to make short- and long-term decisions about handling their finances.

Close Joint Credit Card Accounts and Lines of Credit

Couples working together toward an uncontested divorce have a distinct advantage in closing joint accounts than do couples whose animosity toward each other has drawn them into a contested divorce. The ideal situation is for a couple to work together to close joint credit card accounts and freeze any joint lines of credit. They should rely upon advice and guidance from their divorce attorneys to agree upon a plan for repayment of the debt.

It may be difficult to close joint credit accounts when couples refuse to cooperate with each other. Banks and other issuers of credit cards listing both spouses as jointly liable for the debt may refuse to remove one of them, so someone concerned about a spouse making more charges on the account should discuss the situation with a divorce lawyer.

The documents a party gathers and turns over to a divorce lawyer may be helpful when courts decide how to divide responsibility for marital debt. Virginia law authorizes judges determine the value of marital debts, which are those owed by both spouses, as of the date of the divorce trial. However, evidence that one of the spouses increased the marital debt through use of a joint credit card leading up to the date the parties separated may persuade a judge to use an earlier date for valuation purposes.

Open Separate Accounts to Use During and After the Divorce

It is essential for someone going through a divorce to establish their own financial identity. This includes setting up individual checking and savings accounts and acquiring a credit card in their own name.

Create a Budget and Keep Track of Income and Expenses

Creation of a budge may help ease the transition from a two-income household to learning to live on a single income. Budgets force people to be aware, perhaps for the first time, of what expenses they have on monthly basis. Comparing those expenses to the available income frequently forces people going through a divorce to make changes in their lifestyle to reduce expenditures.

Parties to a divorce should take into consideration their long-term financial needs when creating budgets. These may factor into decisions made during negotiations by the divorce attorneys or in a decision made by a judge about child support, spousal support and division of marital property.

Unless the parties have reached written agreement on the division of marital property, support and other financial issues related to their divorce, their financial future may be uncertain. It may be best to delay purchasing a car, home or other expensive items until after the conclusion of the divorce when future finances may be clearer.

Get Professional Advice and Guidance

Financial issues arising in a divorce can be complicated and may have long-term implications even when the parties appear to be amicable and in agreement. Obtaining legal advice from a trusted divorce law firm may prevent a person from making a costly mistake.

The divorce attorneys at the Yorktown offices of the Denbigh Law Center have provided legal advice and outstanding representation matters since 1982. People living in the Hampton Roads region have come to depend upon them for assistance with divorce, military divorce, child custody and other types of family law matters. Contact them today for a consultation by calling 757-877-2244.