Posts Tagged ‘Finance’

Everyone realizes that finances are integral to our lives today, and in a marriage, finances are often tightly intertwined with one’s spouse. Therefore, if you are considering divorce, what steps should you take regarding your finances? It should go without saying–but I’ll emphasize it anyway–you should discuss your financial situation in depth with your attorney. That said, let’s consider some of the basic steps you should consider taking.

First of all, it is paramount that you analyze both your current financial situation and how your financial situation will evolve in the future. What are your outstanding financial obligations and goals? How are they entangled with your spouse? How should you approach disentangling your finances?

Consider gathering liquid cash assets to help assist with your attorney fees, potential moving expenses, and starting your new, post-divorce life.

Does your situation fit one or more of these three conditions: 1) a long marriage, 2) your spouse earns the lion’s share of the family income (75% or more), and/or 3) you have a family-owned small business. Each of these will factor strongly in your options and considerations.

If you do not already have one (not to be sexist, but this is common for women especially), open new checking and savings accounts in your own name, and it’s also good to obtain your own credit card, issued in your name alone. It may indeed be a good idea to use a different bank than the one that your spouse and family have been using. While banking officials are not supposed to divulge any information about your banking activities, it’s better to avoid that risk by doing business with a different institution.

Consider closing all joint credit card accounts so as not to accrue any new balances on those accounts for which you may be responsible; obtaining your own credit card, as mentioned above, will help. While you should first discuss this with your divorce attorney, you may want to consider removing one-half of the money in any joint bank account and placing it in your new account or safe deposit box. Check your bank statements for any unexplained withdrawals or large purchases, and discuss these with your attorney, as they may be attempts by your spouse to hide assets.

If you own valuable jewelry or collectibles or similar items, consider placing them in a safe deposit box to prevent your spouse from accidentally “losing” or “loaning” them or even pawning them for cash. You may want to ask a trusted friend or relative to co-sign for the safe deposit box so that, if anything happens to you, they can access the contents of the box, but be sure that person can be trusted as they will have access to the safe deposit box at any time. You should document this so it is not viewed by your spouse or the court as an attempt to secret or hide marital assets.

There are many more considerations, far too many to go into here. In all cases, discuss these issues with your divorce attorney in detail.

As the American economy has spun through major changes and debt has mounted for many American families, the issues involved in debt and divorce are escalating and taking an ever bigger role in divorce proceedings. Divorcing clients often face short sales or foreclosure of their homes; educational loans, credit card debt, and mortgages; and sometimes even bankruptcy.

What are some of the key issues in a Massachusetts divorce case regarding joint liabilities? Generally, debts and liabilities fall under the larger umbrella of property distribution. And in Massachusetts, property division must be equitable, but not necessarily equal: that is, fair to both parties, given differences in each party’s debt load and property value.

Although it may sound overly simplistic, there are only a few main options:

1. Pay It Off
Where possible, paying off joint debt prior to finalizing the divorce may provide closure and making a fresh, clean start after the divorce, as well as protect the credit ratings of both spouses. While the economics of the situation may seem insurrmountable, possible means of paying off joint debt could include sale of proceeds from the marital home, sale of other assets such as a second home or other valuables, or with liquid savings. Doing so allows both parties to leave the marriage with less debt, making a clean start minus that financial entanglement with your ex.

2. Split Debt
For debt which cannot be paid off as above, the next best option is to split the debt equitably, with one spouse taking responsibility for some debt and the other spouse for other debt. For example, one spouse could take responsibility for VISA debt and the other for MasterCard. However, an important caveat is that, if the two spouses were originally mutually responsible for the debt, if one defaults, then while that spouse may be in contempt of court for violating the terms of the divorce, the creditors could still legally go after the other spouse for payment.

3. Ongoing Joint Responsibility
In this case, both parties remain responsible for the debt, and the debt load is shared between them after the divorce. Again, in this case each ex-spouse may still be legally responsible for debt payment if the other defaults.

4. Bankruptcy and Credit Consolidation/Counseling
An experienced divorce attorney should have some basic understanding as to whether bankruptcy or credit consolidation/counseling are possibilities in your particular situation. Bankruptcy is a major event and should not be entered into lightly. Discuss these options with your attorney to see if they apply to your case.

5. Other Creative Options
Depending upon your individual circumstance, there also may be other viable alternatives which an experienced attorney can identify.

The information contained in this blog is for educational purposes only and is not legal advice. The use of this Blog does not create an attorney/client relationship between you and the Law Offices of Barry R. Lewis. If you are considering divorce or if you are involved in any legal matter, you should hire an attorney.

Massachusetts Divorce and Family Law
Attorney Barry R. Lewis — Divorce Law Specialist
Locations Throughout Eastern & Central Massachusetts :: 508-879-3262