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Getting a Divorce When You’re Self-Employed: 5 Financial Steps to Take

divorce self-employed

Going through a divorce sucks. Trust me, I know. I’ve been there. But when you’re self-employed it can get even more complicated and stressful. When I went through my divorce, I had to learn everything on my own. But since I experienced this first hand, I can share what I’ve learned along the way.

Aside from the emotional stress, there are financial worries that need to be addressed as well. So whether you’re about to get divorced or knee deep in the process, here’s what you need to know.

My experience came into play recently, when I met up with a client who is both self-employed and going through a divorce herself. She was scared, lost, and didn’t know what steps to take next. In her words “my financial situation is bad, really bad, and I don’t want to lose my business”.

By the time our conversation was over, she was feeling better and had a game plan of exactly what steps to take. If you don’t have a good strategy (especially as a business woman) you could get burned in more ways than one.

The best thing you can do is stay calm, keep the emotions out of it as best you can, and create a well-thought-out strategy. Here are some crucial steps to take to protect yourself, your future, and your business as you go through a divorce.

Step 1: Get Organized

The first thing you need to do is get organized and gather up all your financial documents. This includes statements for credit card accounts, car loans, mortgage loans, checking or savings accounts and investment accounts.

Any assets, debts and bank accounts need to be thoroughly combed through, so you get an accurate snapshot of where you stand. Look over the bank statements, insurance policies and other important financial documents to update yourself.

Doing this will make any unexpected situations less stressful and you won’t get side-swiped by surprises.

If you’re already organized with your finances, or use financial software like Mint or FreshBooks, you may already know all this information. In any case, you’ll want to update yourself and make sure everything is accurate.

Step 2: Fill in the Details

Now that you’ve written all the info down, or put it on a spreadsheet, it’s time to fill in the details. You don’t want to be caught off guard when the divorce lawyer starts asking you questions (and I promise you, they will).

Not only will they ask you these tough questions, they will request you to fill out forms filling in all the information. Basically they want your whole financial life written down, from assets, to debts to bank accounts.

  • What’s the balance in each of your bank accounts (both personal and business)?
  • What’s the balance(s) on your credit cards and other loans?
  • What are the interest rates and terms for each of these?
  • How is your business structure set up (are you sole-proprietor, LLC, or partnership)?

And the most important detail you need to know is whose names are on the accounts. Who’s responsible for the payments? Are they joint or individual accounts? Do you have your spouse listed on your business accounts? All of this will have to be sorted out properly, so you can protect yourself and your business.

Step 3: Divide all Joint Accounts

Once you’ve determined who owns what and who’s responsible for what debts, it’s time to separate all joint accounts, including business ones. When my ex and I went through our divorce, we had two joint assets; our mortgage and a joint bank account. Fortunately, the business account, car loan, and credit cards were only in my name.

If you don’t take each other off joint assets, you’re leaving yourself at the mercy of your partner. They may or may not pay their portion of the debt bill each month, or they may clean out your business bank account at will.

Don’t leave yourself open to their emotional whims. If your divorce isn’t civil, they could leave you fully responsible for any debts as well as tanking your credit score (which is tied to your business if you’re self-employed).

To properly protect yourself from this situation, you’ll have to divide assets and accounts by putting them in your own name. You may have read that in order to give up interest in your personal residence, you can sign a quitclaim deed, but this is not always the case.

Both names will still be on the mortgage papers, so in the event your partner doesn’t pay the payments, the bank will come after you. The only two options to get your name(s) off the loan is:

  • Agree to sell the home (or whatever asset both of your names are on)
  • Get a new mortgage/loan by refinancing into only one of your names

When it comes to a mortgage held in the names of two people, the lenders could care less about who lives in the house or who’s making the payments. All they care about is that they get their money. And if your spouse stops making payments, they will come after you and the assets in your business.

Until you sell the property or refinance it, you’re both equally responsible for the loan  despite your marital status or attempts to take your name off the property. I’m not saying this to scare you but to warn you that you have to put your big girl panties on and take care of yourself!

Step 4: Protect Yourself

Now that you’ve put things in motion to divide the assets, and get your name off joint accounts, it’s time to take precautions and to protect yourself as you move forward.

Before signing the final divorce papers, don’t be afraid to fight for what you want or need. It’s very difficult, if not impossible, to have some things amended after the fact.

Although it will be very hard emotionally — and there will be times you just want it all over, but don’t get in a hurry. You might make hasty decisions you’ll regret later, and your business could be the one that foots the bill.

Step 5: Keep a Paper Trail

There were days when my ex and I were fine talking calmly and sorting through our business, and then other days we couldn’t say one word without yelling at each other.

In the event you and your ex can’t discuss anything in a calm fashion, you’ll need to have written proof of your discussions and decisions. A verbal agreement will rarely stand up in court, and if you have a more complicated situation like a business, or children involved, it’s even more imperative to keep a paper trail.

Even something simple like saving your text messages or emails is better than nothing. In case something bad happens or you’re wrongly accused, you will have proof of your dealings together.

This also applies to any transactions with creditors or joint accounts where you’ve divided the accounts. You need to keep written records of any business transactions, debt settlements, loan refinances, debt payoffs and other financial recordings.

Getting a Divorce While Self-Employed

It’s never simple when you’re faced with an unexpected situation like getting a divorce while being self-employed, but if you take these important steps, it will be a little easier for everyone involved. Plus, you won’t lose your life’s work and can protect your career in the future.

If nothing else you’ll be able to lessen the damage. A business woman that’s financially prepared will be able to save a lot of time, money, and emotional stress. You’ll be able to move forward so you can live, love, and enjoy your work again.

If you’re going through a situation like this or know someone who is, please share this article with them.

Have you been through a divorce as a self-employed person? Please share any important advice you have, in the comments below.

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About the author: Carrie Smith is a financial writer, business consultant, and freelance coach. After paying off $14,000 of debt and quitting her full-time accounting job, she launched Careful Cents to help other creative freelancers overcome financial mountains. She works one-on-one with side hustlers and go-getters who are ready to make a profit without selling out. When she’s not writing about finance, and geeking out over numbers, she enjoys painting, sketching, and making food with her chef husband. You can connect with her in real time on Twitter or Instagram: @carefulcents.

20 Comments... Read them below or add one of your own

  • Karen October 8, 2012, 5:10 pm

    Great information. I really like the photos on this post too, Carrie. Have you considered teaching for Nefe? I believe they have a curriculum for this topic.

    • Carrie Smith October 9, 2012, 12:31 pm

      Hmm, no I haven’t thought about teaching for them. But that’s a great idea Karen, thank you!

  • Roger Wohlner October 8, 2012, 7:53 pm

    Excellent post this is great advice for anyone going through a divorce, and with a few tweaks I would also say this is applicable to someone who becomes a widow or widower. Well done!

    • Carrie Smith October 9, 2012, 12:32 pm

      Thanks Roger! I’m happy I can help other people facing this same type of situation. And you’re right, it’s a great guide for widows/widowers.

  • Robb @WatchOutForFlyingNinjas! October 9, 2012, 1:27 am

    You have my condolences, I hope I never have to go through something like this. Reading this, plus hearing all the Dave Ramsey callers in similar situations is really scary to hear.

    • Carrie Smith October 9, 2012, 12:33 pm

      Thanks Robb! It’s a very tough place to be in and I wouldn’t wish it on my worst enemy. But the one good thing that came out of it is, that I can help others who are going through the same thing.

  • frugalportland October 9, 2012, 3:50 pm

    Oof, great advice, but advice that I hope I don’t personally have to follow — SO glad you’re out there for people who need you!

  • Suzanne Cramer October 10, 2012, 7:43 am

    Great post Carrie! I have also been through divorce and luckily for me I was able to get my finances in order after the dust settled. I think information like this is so important for those going through this life changing event! Thank you for sharing :)

    • Carrie Smith October 10, 2012, 10:40 am

      I admire women like you who had to go through the process and learn everything on their own. That’s the only upside to experiencing this myself, that I can help other women not feel so overwhelmed or lost. And hopefully help them be more prepared too.

  • Abby October 11, 2012, 7:15 am

    Keeping separate accounts was the Only thing that made my divorce go smoothly. I hate to recommend that to dewey-eyed newlyweds, but seriously, it saved me.

  • KWWest October 14, 2012, 2:46 pm

    During the process of divorce, we had a modular home we purchased for 60k. When going through divorce, what is the recommendation for handling property? Most say sell and split the money, but what if the one party ‘contributes’ more to the relationship or household than the other?

    • Carrie Smith October 20, 2012, 11:47 pm

      That’s something each couple will have to figure out for themselves. It also depends on what state you’re in, whether it’s a community property state or not.

  • Karen July 8, 2013, 10:00 am

    Hi Carrie
    My situation is different. I do a lot of reading on divorce when you’re not able to find your spouse and it seems complicated. I will be retiring in a year and it’s urgent that I get divorced. Any help or opinions would be greatly appreciated. Thanks.

  • Amy January 23, 2015, 1:32 am

    Hi Carrie,
    My husband and I have been married for 20 years now. I am a house wife with no education and no job skills to offer at age 41. My husband surprised me a few weeks ago in a public place infront of our son with wanting a divorce. This was unexpected and came as a total shock to me at the time and has left me depress and unsettled ever since. The house and our new cars are under both of our names. My husband makes a 6 figure salary yet the large credit card bills are under my name alone totally over 10,000. Any advice you can give me considering my last decent job was working at Denny’s in my teens. Thank you – Amy from Texas

    • Carrie October 18, 2015, 9:25 pm

      Hi Amy,

      Sorry to hear about your situation. Going through a divorce is never a fun process. I highly suggest starting to work as a freelancer and connecting with people virtually so you can build up a portfolio of freelance skills — like editing, writing, design work, coding, technical writing, etc. Even something like helping people manage their email inbox or input date into a spreadsheet as a virtual assistant. This will allow you to be your own boss and get back on your feet quickly. Hope this helps!

  • cindy October 15, 2015, 2:12 pm

    Good Morning,

    My spouse is working under the table and is stating they only make $500 a week cash. Which I know really is more,,,,,they are being honest to their attorney as well as to me.

    We are getting to the point of % of child support and I think it should be fair….. When in divorce proceedings can you file for a full discovery of payment from the person they are working for?

    • Carrie October 18, 2015, 9:26 pm

      Hi Cindy, I’m not the best person to ask this question since I didn’t have any kids when I was going through a divorce. I have no idea about that process. It’s best to speak to a divorce or child support attorney.

  • Madel Brown October 18, 2015, 9:04 pm


    How about if you are not married? Bought a car when we had relationship and he promised to pay monthly because he had bad credit. We broke up and he didn’t want to pay the car. We do have text when we were still together that he put money in the account. Since we broke up, he stopped paying.

    What can I do to collect back from him?


    • Carrie October 18, 2015, 9:28 pm

      If you’re not married then he’s not legally liable to pay for the car. That’s the problem with not being bound to each either with a piece of paper unfortunately. So you’re likely going to be on he hook for the payment. This is why you should never buy property with someone who isn’t your spouse (legally, common-law, or otherwise). So sorry you’re dealing with this. You could sue him if you have some texts where he promises to pay, but a judge will likely not rule in your favor otherwise.

  • Frances November 29, 2015, 6:56 am

    Hi Carrie,

    My situation is rather complicated. Everything is in my name including my husbands business which I started for him after he had declared personal bankruptcy.
    Now He started an affair and we are on the rocks. He has always taken care of all the bills so I am in the dark completely. Our accounts are all joint except for the business account. Do I have the right to freeze that account on him as it is in my name too?

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