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5 Ways To Numb The Financial Pain Of Divorce
Author: Brad Stroh  | Posted: 22-07-2006 | Comments: 0 | Views: 159 | Rating: (51)  (?) 
Whether it comes before or after the papers are signed, economic hardship is all too familiar to many couples who divorce. Following a few financial guidelines can ease the burden during this difficult time.
Each year, 1 million Americans divorce. More than 80 percent of divorcing couples cite "debt and financial distress" as the primary factor in the dissolution of their marriages, according to an American Bar Association survey, and studies find that most families suffer a financial decline following a divorce. By taking steps to protect credit, families can come through in much better shape. Bills.com, a national consumer finance portal, encourages divorcing couples to take the following steps:
1. Accurately assess debts and liabilities. First, see yourself as your creditors do. Online (see http://www.myfico.com ) or by phone, you can request a "tri-merge" credit report (a summary from all three major credit reporting bureaus). Note all of your existing shared and individual liabilities. Settle (or get a judgment) on how you'll allocate these responsibilities.
2. Plan on how to handle your home. If you own a home, the mortgage is likely your most significant monthly payment. Be certain you understand how you'll resolve monthly mortgage payments, and how you'll divide the home's value - whether one partner buys out the other now, or the home is to be sold after children are grown.
3. Budget for payments. Create a detailed budget, based on your new income level, and use free cash flow to pay off debts. Most people find the most efficient way to pay off debts is to first pay off smaller bills - starting with under $100 - then pay off loans and unsecured debt, such as credit cards, beginning with the account with the highest interest rate.
4. Make sure your ex-spouse is making his or her payments. If possible, make provisions in the divorce agreement for reporting on resolution of significant debt. There are important implications for you personally if your spouse does not meet his/her end of the bargain on liabilities allocated through the divorce proceedings.
Call all creditors for shared accounts (credit cards, gas cards, department store cards, phone cards, etc.). Close the accounts if you are not carrying balances, or remove your name from jointly held accounts. Remember that for jointly held credit cards, and for any other debts incurred during the marriage in community property states, you have shared liability - and thereby share any potential negative credit rating impact. This means that if your spouse does not make payments after the divorce, it could come back to haunt you - and your credit rating.
If you owe back taxes, be aware that the IRS does not have to honor a decision from a divorce judgment. Consult a tax expert to help with your divorce tax planning.
5. Focus on rehabilitating your credit and financial health. Begin a savings plan. Reinvest any proceeds or equity that come out of the divorce proceeding, and be especially cognizant of building yourself a retirement fund for the future.
If you find yourself in trouble during this stressful time -- in which you must make many financial decisions -- seek help immediately from a reliable, professional debt resolution firm. Be sure to investigate the company you choose to assist you, and seek out a company that operates for the consumer, which is markedly different from credit counseling, debt consolidation, and debt management firms.
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Article Source: http://www.articlesbase.com/automotive-articles/5-ways-to-numb-the-financial-pain-of-divorce-43207.html
About the Author:Brad Stroh is currently co-CEO of Freedom Financial Network and Bills.com. If you would like more of Brad's articles, please visit the Bills.com information on Debt.
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By: Debbie Debtor | 23-08-2008
Are there any debt reduction programs that are recommended besides the non-profit ones? I tried working with Consumer Credit Counseling, and they couldn't reduce my interest rates any further than I have already gotten them, and they don't actually cut down the amount you owe like some of these programs say they can (such as reduce your debt 60%). Are these programs hoaxes or are there any legit programs out there -- I would pay to have my debt reduced, a reasonable price.
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What is the best way to get out of debt and raise my credit score?
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By: lost in debt | 23-08-2008
What about the debt management programs available? They appear to offer a quick solution, but do they really help individuals who are in a lot of debt? Can they negatively effect these individuals?
We have approx. $70,000.00 in credit card debt.We ...
By: landc11 | 23-08-2008
We have approx. $70,000.00 in credit card debt.We feel into the credit card syndrome with using the new cards wiht no interest to pay off other with high interest. In the last 3 years we have paid out almost $40,000.00 in doctor bills, medications and glasses,etc. We are now in a situation where with the price of oil, and gas and electric that it is becoming increasing hard to pay these bills. We are not sure if we should go into a debt management program, hoping that with some assistance we can get these bills under control and hopefully get a lower interest rate buy working with a company. I have thought of debt settlement just for the accts. in my name which is about $32,000.00. My wife and I have very good credit and I figure that if I took the hit in my credit it would rebuild a little faster because we have a few accounts with both names on them. The only thing that worries me is the possibily of being sued and oweing more that we started out with. Also are there any debt management companies that you would recommend using from the internet. Thanks and we look forward to hearing from you soon. Landc11
Credit Counseling
By: hopeful1 | 23-08-2008
We are so far in debt there is no light at the end of this tunnel. Our credit cards are to the maximum amounts and the interest rate on all is the high 20's and some in the 30's. Should we contact a credit counseling service? How do we know who is legit and who is a scam?
I have about 15,000 dollars in credit card debt ...
By: huney411 | 23-08-2008
I have about 15,000 dollars in credit card debt. I have found that i am at this point only able to make the minimum payments and find myself transferring the balances between cards when they offer 0%Apr deals. I recently looked into debt consolidation and the payments would actually be more than i am paying now, which i am barely able to afford. I am wondering is it possible to get a loan from my credit union and pay off my credit cards, and then just pay on that loan over the next 5 years? do you think that would be beneficial at all? I really am not sure WHAT to do... but i know that i want to pay off this debt, close some of my accounts so i am not so tempted to use them... and live within my means finally! thanks.
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