Incurring some debt in the course of a divorce or family law case is usually unpreventable. However, in the most unfortunate circumstances one may find their selves on the verge of losing everything they own to debt and financial strain caused by divorce. In such situations, it may be difficult to maintain the status quo due to rapid changes in the family finances which may force you into a pattern of accumulating debt and missing payments. During a divorce case it may be possible to avoid long term financial damage from a divorce by employing a few strict strategies.
During a divorce or family law case it is imperative to try and maintain the status quo by retaining assets and continuing to make monthly payments on time.
Make all payments on debts and bills on time and consistently unless otherwise advised by your attorney. This may mean completely cutting out all absolutely unnecessary expenses on a temporary basis. Maintain a paper trail keeping all financial records and checking credit via free credit reports a couple of times per year. To avoid accumulating debt during litigation be sure to make regular payments to your attorney; and do make it a habit to talk with your attorney about how your case is progressing and the anticipated costs going forward.
Try to Manage Your Debt During Divorce by Doing the Following:
- Maintain the financial status quo for all necessary expenses
- Eliminate all unnecessary expenses
- Make payments on time for all bills
- Pay all necessary bills and debts first
- Make the minimum payments (or more) on all accounts
- Retain complete and accurate records of all payments made
- Check your credit score periodically
- Immediately eliminate all unnecessary expenses until your case is over and you have adjusted to your new financial situation
- If you have a student loan, see if you are eligible for a temporary hardship forbearance
- If you cannot pay your income taxes as they come due, see if you qualify for a monthly payment plan
Do not get involved with any business deal or transaction that will significantly alter your current financial situation or will cause the dissipation of significant assets.
Do not significantly alter your payment patterns in any way. Do not miss payments and do not pay off debts in full during a family law case. If you fail to make minimal payments you will begin to ruin your credit and if you pay off debts in full you may find yourself not holding back enough funds for an emergency. Furthermore, you may accidentally pay off a large portion of debt that may have been subject to equitable division by the court, requiring you to pay only a portion or none of the debt. Do not pay off any bill in full unless otherwise directed by your attorney. Do not intentionally run up credit card debt; or you will either be forced into bankruptcy or will be forced to pay off the debt sooner or later by the court. Lastly, do not incur debts for items, procedures, or services that you do not want your spouse to know about. All of your debt is subject to being produced as evidence in discovery. Obviously, debt for frivolous expenses or immoral habits can lead to financial sanctions and a worse result for your case.
If you find yourself in a pattern of debt during the course of a divorce or family law preceding, it is important to address it as soon as possible. Eliminating unnecessary expenses as soon as possible is the first thing you should do. Trying to make extra income if possible is also a tactic that many people do as needed. This can be done by working overtime if possible or taking a second part time job. Do not wait and allow for the pattern to continue on until you are completely consumed by your debt. If you wait, you could be facing bankruptcy, foreclosure and possibly a significant loss of assets.
Your debt could also negatively impact your legal case. For example, a judge may not favor a parent for custody of a child if the parent has recently lost their home due to debt and cannot provide a stable environment for the child. By cutting expenses as soon as possible and employing strict financial strategies, you can anticipate a decrease in the chance your financial situation will negatively impact your divorce case.
If you find yourself facing divorce or family law matter, call us at 770-609-1247 to discuss your case with one of our experienced and a caring attorneys.