Personal Finance 

Financial Disaster: How to Deal with Divorce

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According to the CDC, in 2009 the divorce rate was 50%. Per 1,000 people there were 6.8 marriages and 3.4 divorces. Looking at the data from the past three years, it might look like the trend is reversing as the number of divorces per 1,000 people has fallen in each of those years but the number of marriages has fallen at the same rate. Sadly, there aren’t a lot of negative life events with a higher degree of probability so being prepared and knowing what to do financially if it does happen, is well advised. It might not be such a well advised topic of conversation but what should you do to prepare for and deal with divorce should you be one of the 50% who ends up with a broken marriage?


Anybody with a high net worth, has a sizable future inheritance, or has another reason why they would want some portion of their assets to remain theirs should talk to their future spouse about a prenuptial agreement. Other than protecting yourself in the event of a divorce, there may be other reasons why a prenup would not only protect you but also your spouse.

Get an Attorney

Legal Zoom or another do it yourself divorce filing isn’t going to work. You need the advice of an attorney in order to divide assets, settle debts, child custody, and other financial obligations. In addition, because divorces are usually emotionally charged, have an unbiased mediator can help to ensure fairness on both sides.

Make a List

Make a list of all of your marital assets. Your home, cars, insurance policies, investments, bank accounts, frequent flyer miles, and any other asset of any substantial value. The detailed list that you keep for your homeowners insurance is a great place to start.

Don’t pay an attorney an hourly rate to figure out who gets the pots and pans. Remember that the quicker you can come to an agreement, the less money it will cost you. Don’t be difficult for the sake of getting back at your spouse. You’re the one who ends up paying more.

Compile the Paperwork

Your most recent home mortgage, car loan, credit card and investment statements, tax returns, appraisal documents for jewelry and other valuables, business information if you or your spouse owns a business, documentation of future obligations, and any other financial document that may become part of the settlement should be copied and presented to your attorney.

The Kids

Your children didn’t cause the divorce so make sure they are taken care of in the best possible way. Figure out what it will take to adequately support your children and make sure they have what they need.

Divorce almost always has a person who wants the divorce and the person who doesn’t. Maybe in your case it’s a mutual decision but if you’re the one asking for the divorce, make sure you have talked to a marriage counselor and spent a lot of time looking for alternatives. Financially, divorce will wreck your finances and it will take a long time to recover. Relationally, the results can be even more devastating.

{ 5 comments, please add your thoughts now! }

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5 Responses to “Financial Disaster: How to Deal with Divorce”

  1. Zanne says:

    Being a divorce attorney, in excess of 25 years, I agree whole heartedly with the statements made in your article. I would also caution the parties that if the lawyer from whom they sought advice advises one party to make war on the other, to run to the exit. A mark of competent attorneys is that such an attorney will work with the client to get the least expensive divorce possible in the circumstances, and not fan the flames to increase billable hours. Please note, if you don’t like the attorney, don’t hire the attorney – find another! Attorneys are a dime a dozen. You can find one you like. Most attorneys will offer an uncontested divorce for a flat fee, which if you follow the advice in this article, is what you have when you agree between yourselves on the terms. Agreed upon divorces are the easiest and cheapest divorce you can get, although not necessarily the fastest. In my jurisdiction, you could get a fault based divorce in 3 days, but an Irreconcilable Differences divorce takes 60 days. However, most people don’t want the Final Decree to state they were divorced on the basis of adultery, so speed is not the goal. Generally speaking, the attorney represents only one of the parties, not both. Be aware that you can’t contract issues that are defined by law – state law sets minimum child support amounts, for example, and you have to pay child support until the time your state law mandates the child has emancipated. Make a list of questions, in writing, to ask the attorney, and bring the list with you to the appointment. (You’d be amazed at how many people leave their list at home!) The lawyer should explain the procedure of getting a divorce in your jurisdiction; s/he should explain what terms have to be agreed upon and which ones are mandated by law; they should discuss fees with you; and they should answer your questions. You should expect to pay a consultation fee for about an hour’s worth of time, and that’s how long you will be there if you tend to business and don’t wander off into how badly you have been treated in the marriage. (My office doesn’t charge the consultation fee if you retain the office to represent you in the divorce.) The lawyer is there for your legal business, not as a counselor. The last idea I would suggest to such parties is that, if there are children, and the marriage could be salvaged at all, try to make it work no matter how hard it is. The children need two parents who love them even if they are basically room mates to each other, so long as there are no other issues, such as sex, drugs, and violence, involved. The parents who divorce because they choose not to get along certainly pay in terms of money, time, and heartbreak – but only for a finite period of time. Those children pay for the rest of their lives. Frankly, no matter how good your relationship is with your ex, when the ex moves on to a new partner, you’ll find out that the new partner is who controls your access to your child.
    Sorry to hijack your article, but I couldn’t resist commenting.

    • Michael says:

      Zanne, thank you.
      If you ever start a blog, please post it on this site. Love the way you write.

  2. Bob says:

    It is a proven fact that marriage is the leading cause of divorce.

  3. timparker says:

    Zanne…best comments I’ve read in a long time. The readers certainly got a lot out of reading your thoughts. Thanks for taking the time!

  4. ace carolla says:

    male cousin is getting a divorce.

    he’s 31. soon to be ex-wife is 26.

    been together for 7 years, married september 2012. divorce talk july 2013.

    he apparently met a girl 3 weeks before their september wedding – at his bachelor’s party! they have been seeing eachother since! (wife does not know this)

    no kids, few assets. wife will be getting what’s in the bank account – 30,000 USD.

    not a bad payday.

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