The Financial Consequences of Divorce

A divorce can be rough financially as well as emotionally. Stephanie AuWerter, Editor of SmartMoney.com, has some tips for lessening the blow.

Because divorce is such an emotional process, it can be difficult to focus on practical matters, like your finances. Don't go into a divorce without doing a little prep work. "Lawyers are not cheap," says AuWerter. "Any work that you can do on your own dime, rather than your lawyer's dime, is going to save you some money." The easiest thing you can do is get your financial paperwork in order before you see your lawyer. Get together important forms like your tax returns, 401k statements and other documents ahead of time. That way, you won't waste your lawyer's time - and your money - sorting through it.

Your attorney is not your financial advisor. You shouldn't go to them looking for tax or other financial advice. If you need a financial planner, hire one. Otherwise, leave your lawyer to take care of legal matters only.

Just because you have a lawyer, though, doesn't mean you should rush to court. No matter how upset you are with your spouse, you can save a ton of money if you can settle outside of court. "[It] could easily double your costs - or more," says AuWerter.

Also, while you're hashing out who gets what, don't ask to keep the house. "It is commonly something that women fall into," says AuWerter. Many times, the partner who keeps the house finds that he or she can no longer afford it after the divorce is finalized. "A better strategy can be to sell that house and move to a new area, new home and rebuild your life from there," says AuWerter.

Whatever the outcome, though, don't forget to pay your bills, no matter how much stress you're under. "One spouse will stop paying the bills, whether it's out of spite, or just the chaos that's going on," says AuWerter. "That could really hurt your credit report or your credit score."

For more information on the financial aspects of divorce, as well as additional financial advice, click here to visit www.SmartMoney.com.


By Erin Petrun
  • CBSNews

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