Divorce and Finances

ome say divorce turns a marriage into a financial transaction. Corey Blake from New Horizons Credit Union joined us on Studio10 with some tips and information.

Here’s a look at some of the questions Corey answered.

What is the biggest financial challenge when it comes to divorce?
To cleanly separate all debt. If you ever signed on a loan while married, your name is still on the loan after the divorce. Regardless of what the divorce decree says, the lender will come after anyone and everyone who signed for it.

What do they do with the house?
Look back to see if your name is on the loan. If your spouse is going to keep the house, they will need to refinance it in their name. If that isn’t possible, then the property needs to be sold.  Remember, if your name stays on the loan and payments are late or fall behind, the lender will be looking to you for payment. Simply sell the house and split the equity, if any.

Any tips on handling credit card debts?
Again, keep it clean. If your spouse agrees to accept any joint credit card debt, have them transfer the debt to a card in their name only. Close any credit card accounts that you have both signed for.

What about card loans?
Whoever is going to keep the car should first refinance the car in their name only. The rationale is the same as other debt, you don’t want to be making payments on a car you don’t own.

Any other financial tips?
Establish your own saving and checking accounts, and double check where your direct deposits are going.  Change your joint insurance policies to only yourself.  Make sure to check into the rules on your 401K and pension plans.  Ultimately, the cleaner the break, the better prepared you are.

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