5 Crucial Financial Steps to Take When Getting a Divorce

Going through a divorce sucks. Trust me, I know. I’ve been there.

When I went through my divorce, I had to learn everything on my own. But thankfully since I’ve been there, I can share my experience, and 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, I’m sharing what I’ve learned.

My experience came into play recently, when I met up with a client who was going through a divorce herself. She was scared, lost and didn’t know what to do next. In her words “my financial situation is bad, really bad”.

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 the 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 and your future.

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.

Visualize your future and make a plan

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 of each bank account?
  • What’s the balance(s) on your credit cards and car loans?
  • What are the interest rate and terms?

And the most important detail you need to know is whose names are on the accounts. Who’s responsible for the payments – meaning, are they joint or individual accounts?

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. When my ex and I went through our divorce, we had two joint assets; our mortgage and a joint bank account. The car loans and credit cards were in our individual names.

If you don’t take each other off the joint assets, you’re leaving yourself at the mercy of your partner to do with it as they like.

So if your divorce isn’t civil, they could clean your bank account or stop making payments on the mortgage, leaving you to cover the difference (all while taking your credit score down with it).

To properly protect yourself from this situation, you’ll have to divide your assets and accounts by putting them in your own name. You might have heard that you can sign a quitclaim deed to give up your interest in the home, but this is not 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
  • Get a new mortgage by refinancing

When it comes to a mortgage held in the names of two people, the lenders could not 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.

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.

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 going forward.

Before you sign 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, you don’t want to get in a hurry. You might make hasty decisions you’ll regret later.

Write everything down and keep a paper trail

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 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 debt settlements, loan refinances, debt payoffs and other financial transactions.

To sum it up: It’s never simple when you’re faced with an unexpected situation like getting a divorce, but if you take these important steps, it will be a little easier for everyone involved.

If nothing else you’ll be able to lessen the damage. A woman that is 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 and love again.

If you’re going through a situation like this or know someone who is, please share this article with them. You can also send an anonymous email to me if you have specific questions.

Have you been through a divorce? Please share any important advice you have, in the comments below.

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About the author: Carrie Smith is the financial artist and owner of Careful Cents, a site that helps creative freelancers discover the art of making a living. In May 2013 she quit her full-time accounting job to pursue entrepreneurship and blogging. She recently launched her new course called, Solopreneur Finance: Managing Money On Your Own Terms. 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.

14 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

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