Going through a divorce can be very challenging. It can lead to financial and emotional stress, uncertainty about the future, and concern for the wellbeing of any children present. Disputes surrounding the ownership and division of assets, such as joint accounts and credit cards, can also arise.
According to the Australian Bureau of Statistics, the average divorce rate in Australia is 1.9 per 1,000 people. While this number is quite low, the financial implications of a separation can be huge. Here are some finance management and financial debt help tips to keep you afloat after a separation.
Cancel joint accounts and credit cards
You may need to be on speaking terms with your spouse to cancel your joint accounts and credit cards. Leaving these open may soon be a liability, especially if your spouse tries to withdraw or spend money without permission.
If you are in a dispute with your spouse (the other account holder), contact your bank. They may be able to temporarily stop any joint accounts so that no money can be withdrawn until the divorce settlement.
Open a new bank account, apply for a new card
Open an account that belongs solely in your name. Redirect your main sources of income (including Centrelink benefits) to this account. You may also wish to apply for a new credit card in your name. Even if you feel that you do not need one right now, a credit card can help you deal with unexpected expenses.
Divide your assets and debt
List your assets and debt, and then assign them a value. Decide which assets belong to who, and who is responsible for paying off all or a portion of each debt.
You should seek legal advice if you and your spouse cannot come to an agreement on the division of your assets and debt. If you cannot come to an agreement, the court has the power to determine the property settlement. This may not be an equally favourable outcome.
Seek financial debt help
If you or your spouse have multiple debts tied up in joint accounts, you might be unsure how to properly resolve these debts with your spouse.
Consider talking to a debt management firm for financial debt help. They can help identify and value your assets and debts, consider the contribution of each party, consider you and your spouse’s unique needs, and propose a custom debt management plan that works for both of you.
Most importantly, a debt management firm will provide expert confidential advice and support, so that you can make an informed decision about your financial future.
Create a new budget
Your income and expenses may drastically change after divorce, so it’s a good idea to create a budget from scratch.
Calculate your new budget based on your individual earnings and expenses, including any relevant child support payments. These may change after the separation process and divorce settlement, but you will at least have a solid foundation to work from.
Where possible, try to make reasonable lifestyle concessions, so that you have the assurance that you will live comfortably after the divorce settlement.
Decide what to do about the house
You will need to decide whether to sell the house and divide the proceeds, or if one will continue to stay. Both parties will need to decide if the one taking ownership if the house will “buy out” the other person’s portion of their contribution to the property.
If one of you chooses to keep the house, that person may need to organise finance to move the home under their own name. This means they will might need to prove that they can meet your monthly mortgage payments on just their income.