Divorce, Dollars and Debt

Emotionally speaking, divorce can be a painful process. Whereas you once thought you had a love to last a lifetime, you now realize this is no longer the case. But if the matters of the heart seem complicated, they are nothing in comparison with the fiscal aspects involved with the legal dissolution of a marriage. These aspects are multiple, sometimes very complex and have a variety of lasting consequences for both parties involved.

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What you need to know:
  • How to Manage Best in the Event of Divorce: The two most important issues that are of significant consequence and that will need to be addressed are that of legality and finance.
  • The Cost of Divorce: Unfortunately, divorce can take longer and cost more money than ever previously imaginable.
  • Financial Risks Involved: There are potential financial risks, too, both present and future.
  • Understanding Debts and Credit: Although a particular marriage may be coming to a conclusion as a result of divorce, unfortunately, the same cannot be said for any and all debts and/or credit obligations accumulated during that marriage.
  • The Financial Effects of the Separation Date: Dependent upon the laws of the state in which you reside, the actual Date of Separation is quite critical and can have a dramatic effect on things such as credit, pension benefits, and other marital assets.
  • Joint Accounts...What Should We Do?: Savings and checking accounts, credit cards, equity credit lines, safe deposit boxes, investment and similar type holdings, and property ownership are some of the issues, to name a few, that will have to be resolved before the actual final divorce can be granted.
  • Searching for Hidden Assets: Many times, it is one of these two or perhaps a combination of both that fuel attempts to "strike back" at or "get one over" on the other. And there is perhaps no greater chance to accomplish these goals when it comes to the impending division of marital assets.
  • Financial Asset and Property Checklist: A list of all relevant documents that you will want to collect and maintain for use in comprehending and preparing for the impending distribution of marital assets and property.
  • Taxes Issues and Divorce: Although a particular marriage may be coming to an end with divorce, this does not mean that the old adage about death and taxes does not still ring true.
  • Dividing the Assets: In any divorce situation, one of the most major and complex elements to be dealt with would of course be the impeding division of the marital assets.

Property Distribution & Divorce
  • Dividing the Goods: Equitable Distribution and Community Property: When a couple cannot agree about the terms and conditions of their property division, the court does it for them guided by either the regime of equitable distribution or a lawful division of community property.
  • Classification of Property Before Division: The classification of assets is a preliminary to the division and distribution of property. In a divorce, everything a couple owns and owes is classified into one of two categories -- marital or separate property. In the so-called all property or Kitchen Sink States, both kinds of property are subject to distribution. In most states, however, only the marital property is divided.
  • Dual Classification and All Property Methods: In general, equitable division states classify property in one of two ways: all property, used in 14 states and also called Kitchen Sink method, or dual classification, used in 29 states to define separate and marital property.
  • Equitable Distribution and Divorce: Also called equitable assignment, the word equitable does not mean equal; it means fair. In this regime, assets acquired during a marriage are subject to distribution.
  • Community Property and Divorce: Community property is all income or property that was acquired during the marriage, with the exception of gifts or inheritances. Community property and its distribution in a divorce is at sharp variance from a common law property distribution.
  • Separate or Marital Property?: A few practical examples illustrate the logic behind designating property separate or marital.
  • Problems with Classification, Division and Distribution: Problems with the classification of assets frequently arise when one party places his or her separate property in joint names, when one partner commingles separate property in an account that contains marital property, or in the case of a business, when one partner made active contributions to the growth of a business the other owned before the marriage.
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Property Division by State

Recession & Divorce
  • Divorcing in a Tough Economy: Demographers note that both marriage and divorce rates "tend to fall when the economy heads south and then rise when good times return," and some contend that the decline reflects a dramatic increase in the number of people cohabiting rather than marrying.
  • Keeping or Selling The Marital Home Upon Divorce: Once upon a time, divorcing couples enjoyed the consolation of dividing a home that had appreciated during their ownership as well as easy mortgage funding for the purchase of a replacement home or the refinancing of an existing mortgage. No more.
  • An Uncontested Divorce Saves Your Money: Divorcing spouses should always remember that every dollar spent on legal fees means one less dollar that one or the other of them will have when each begins a new life as a single person. An uncontested divorce saves both spouses money.
  • Divorce Lawyers Cost Money: Every divorce requires the filing of a Complaint (or Petition) for Divorce, which, depending upon the county and jurisdiction, costs between $150 to more than $200. Normally, a process service or constable serves the papers on the respondent (or defendant), and the fees for this may go as high as $75.
  • Pro Se Divorce Filing Cuts Costs: In some cases, spouses who make an uncontested filing a goal can avail themselves of a pro se filing. Pro se means "for oneself." It's ideal for uncontested actions, where no one wants to prove fault and in short-term marriages with no children, easily distributed assets and both spouses working together.
  • Examining Your Financial Options Before Divorcing: Some would say that staying in a failed marriage is not worth the pain. When the financial costs of divorce seem too great, couples may decide to file for bankruptcy before or after filing for divorce.
  • Separation Instead to Save Money: Married couples who undergo long-term separations generally appear to be those who can’t afford to divorce, an Ohio State University study suggests. Researchers find that about 80 percent of all respondents who separate ultimately divorce, most within three years.
  • Live-In Separations: Practicing for divorce may be the rocky road for many people faced with dwindling home values and decreases in savings. Enforced togetherness is not free of emotional struggles, particularly when one person was surprised with the idea of divorce, as is so often the case.

Divorce & Home Ownership
  • Divorce and the American Dream: For millions of Americans the collapse of the housing market means a stark reappraisal of that so-called American Dream - home ownership. For couples contemplating a divorce, the deflation of the housing bubble often means another difficult consideration when they divide the marital estate.
  • The American Dream Heads South: For many unhappily married couples, the so-called American Dream - home ownership - is a waking nightmare. For these unhappy individuals, the marital home, which is often the largest asset a divorcing couple divides, now becomes a prison "that neither spouse can afford to maintain, and that they cannot sell for what they owe."
  • Three Roads to Take: Normally, a divorcing couple divides the family home in one of three ways: one, sell it on the market; two, a buyout of one spouse by the other; three, joint ownership with sale at a later date.
  • To Own or Rent?: A divorce may be a good time to take a hard look at the realities of owning a house. The deflation of the housing bubble upset many of the assumptions associated with the so-called American Dream, particularly the axiom that the house is an investment, not just a place to live.
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Useful Online Tools

Suggested Reading
The Property Division Handbook The Property Division Handbook
This book will explain in detail the property distribution aspect of divorce and separation. It will focus on the rights each spouse has under certain laws, situations, and circumstances, and how the division of the property will be decided by the court or through negotiation.

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DATE OF SEPARATION – Depending upon the laws of the state of residence, the Date of Separation – called the DOS – has a profound impact on the eventual division and distribution of property and debt, including credit, pension benefits, and other marital assets. As of the DOS, the separated spouses are now in limbo legally and financially and remain so until the actual Date of Divorce. A great deal of money may be at stake. For example, one spouse may share responsibility for any debts incurred by the other; the value of a retirement plan or other marital asset, such as residential property, may fluctuate, often by thousands of dollars.
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