Going through a divorce is one of the worst situations you want to get yourself caught in, but no matter how you want to keep the fire burning between you and your better half, things seem like you are better off alone.

Divorce is a product of emotional wounds that kept getting scratched every time, without healing, that time itself couldn’t suffice the pain you would go through for the rest of your lifetime.

But there is more to divorce than being emotionally agonizing. It will hurt your family, your business, and your finances. It is going to be a tough and rough road ahead that you can only hope your family and finances will fair well with you as you go through life storm by storm.

But how do you get yourself back up financially after getting divorced? Or how can you avoid being financially broke when getting divorced? Some practical steps will be provided in this article.

• What are 5 Things You Need To Know About Divorce and Your Finances?
• How do I Protect myself Financially in a Divorce?
• What is the First thing to do when Considering a Divorce?

What are 5 Things You Need To Know About Divorce and Your Finances

1. Divorce Divides Businesses

Everything in marriage is shared by two persons wanting to live together. Marriage is not only about sharing the rest of your life, but ultimately sharing your experiences and your finances. Community property is what they call it, and it is a 50-50 type of division of all marital properties.

Read Also: How to Avoid Financial Nightmare during Divorce

Absolute community property applies to a few states, and the majority are equitable distribution states. If your marriage fails, chances are you will have to divide all of your businesses and properties.

Although not necessarily a 50-50 division (depending on state policies), this applies even if your spouse didn’t have any significant role in growing the company or business.

If you own a company long before you got married and you haven’t signed any prenup agreement for romantic reasons, you can still try to create a postnup agreement; however, judges can be very dubious about its sincerity.

Nonetheless, if that doesn’t work either, you can arrange with your lawyer different ways of owning the business like paying your spouse monthly half the current value of your company, which can last for years depending on your capability.

If you foresee divorce along the way and have your company assets like vehicles, buildings, equipment, and utilities loaned under a joint account, you can buy them out to make sure that you won’t hurt your business while you go through the process of legal separation.

If your spouse works for the company, fire him or her before you start the divorce process.

The significance of their contribution and capability in running the company can be an additional reason why the court would give him or her the ownership of the company, especially when you are found to be emotionally incapable, which can happen to almost everyone going through these rough times.

Divorce will also affect your intellectual property rights if you own a patent or trademark for your company; the income coming from royalty needs to be equitably divided. Couples who collaboratively compose songs or novels can be subject to this situation.

Intellectual property rights lawyers can help couples in identifying their boundaries when it comes to ownership, but it is the court that divides the proceeds equitably, considering that both invested money in the creation process.

Divorce will divide everything that has a significant monetary value, and that includes your businesses.

2. Divorce Hurts Your Finances for a Long Time

In marriage, you used to share the expenses like cost of living, your children’s schooling, your house and car mortgage, and whatnot, but when you divorce your spouse, you will carry the burden of all these alone.

This is a shock to almost everyone. Although you may feel like you are financially better off alone, there will always be extra costs that will eat up your savings and salary.

It is important that you remember to keep a good record of your individual finances like your credit score.

The initial phase of adjustment after divorce can be very overwhelming because of unprecedented costs like child support, not to mention the costs of the lawyers, doctors, and other professionals you hired just to settle every single thing down. This can put on you in debt for a very long time if you are unprepared.

As mentioned, your business will serve as a community property, so if you are on the point of divorce, you are more likely to pay the other party half the value of your business at the point of divorce if you don’t want to share the month-to-month earnings or to make your soon-to-be ex your business partner.

Almost half of first marriages in the U.S. fail, which is why it is advised that you take significant preventive measures just in case your altar vows don’t last.

3. Divorce Greatly Affects Your Credit Score

Not everyone realizes this very obvious fact, but divorce can greatly affect your credit scores. If you are one of the troubled couples who fail to pay even just those simple phone plans you have together because you are too busy to deal with trifles, then you will most likely hurt your credit score because of this simple lapses.

The thing is, you used to have things together as a bundle of some sort, and one agrees to pay this and that while the other this and that. If you are going to divorce your partner, you should be able to settle even the simple things first that can affect your credit history.

You should be able to sever the joint accounts first before you start the bloody divorce process. You will lessen the after effects of divorce if you are going to do this before everything else.

Your businesses also have their credit history, so be sure to settle the ownership of the company, and as mentioned you can try to buy out your company equipment and resources to keep its credit history in good standing.

Seldom do troubled couples think of selling their company because of its foreseen market value in 10 or more years, and if you are one of them, arrange with a lawyer the possible options you have before you officially start the divorce.

4. Real Estate Wealth

Divorce will also affect your real estate properties. If you own property before you were married, it is automatically your exclusive property; however, your exclusive ownership can be void for some reasons.

One is if you have made the property your house, office building, if you paid the taxes via joint account, or have sent its profit on a joint account. If any of these reasons apply then, you are highly likely to equitably divide the said assets.

The house you both live in, for example, shall be considered a marital property and should be divided equitably. Some couples decide to sell the house but end up fighting over how they would divide the proceeds.

If this is your option, you can hire a mediator or legal counsel to help both of you decide how much each of you should have, and the only downside is their resolution could be something both of you are unsatisfied about.

If one of you doesn’t want to sell the house but continue to live in it instead, that person will lose ownership of other marital real estate properties that have almost the same market value as the house he or she chose to own, or he or she can buy out the other’s interest in the said property to make things fair to the other party.

You will most likely be dividing all of your real estate properties, and that will make you suffer from selling stuff you didn’t want the other to own.

5. Divorce Can Be a Trap to Poverty

Divorce can make you lose track of your savings. As you scramble through sheets and piles of paperwork, you will most likely be overwhelmed and neglect to track your finances.

You might also be unaware that you are already spending more than your individual financial capacity, not to mention your emotional problems can also lead you to vices that can further harm your finances.

Child custody is also one of the most stressful things about divorce. Aside from emotionally tearing your children down because of confusion, it also affects you financially. In fact, statistics states that over 50% of all single parents in the U.S. are either divorced, widowed, or separated.

Becoming a single parent can be very difficult, and it is hard to rely on child support to fend your cost of living.

Also, finding a job can also be very challenging for single parents since no one will take care of their kids or they can’t afford to pay daycare centers. The growing number of unemployed single parents have made them dependent on the government and worse, homeless.

Aside from this, divorce will also affect your working behavior. Divorce often makes people neglect their jobs and turn to drugs or vices in worst cases.

Some single parents choose to work instead of staying at home and may not be able to give time to their children. Divorce is either going to starve you and your children of love, time, or food.

As mentioned, some divorced individuals find it difficult to get back on their feet, which may cause them to turn to drugs or other vices, lowering their standard of living and possibly making them homeless in the long run.

Ultimately, when you are unprepared, even if you are one of the best entrepreneurs, divorce can trap you in poverty.

Divorce can also affect your retirement plans, life insurance, your kids’ college education, 401k, bank accounts, tax refunds, pension plans, etc.

Always remember that undertaking divorce can be extremely complicated and difficult, and the minimum costs for lawyers, divorce specialists, real estate specialists, child custody experts, etc. can be expensive. If you have kids, you will put their college education and future at risk because of these expenses.

Always keep in mind your children’s welfare, because after all, they were one of the reasons you continued to stick together. Consider taking care of your finances first before going through the divorce process to lessen the financial shock on and after divorce.

How do I Protect myself Financially in a Divorce?

While it might be an emotionally harrowing time, it’s important not to lose sight of the bigger picture. You need to protect yourself, your kids, and your future, and that means getting your finances in order.

If divorce is looming, here are six ways to protect yourself financially

1. Identity all Assets and Know which one is Yours

Before you can proceed with anything else, you need to know how much money you have and where it is. Next, clarify what’s in your name and what belongs to your spouse, including any mortgages, bank accounts, investments, and other assets.

“A judge is going to care more about a good financial statement than a picture of someone going out of a motel,” Stanley Corey, a certified financial planner and managing director at United Capital in Great Falls, Virginia, told Business Insider. “It all comes down to the basics of the dollars and cents, so get current statements of value of assets and get things clarified.”

2. Request for Copies of all Financial Statements

Get everything in writing. Everything. While the court may not care about proof of your spouse’s affair, it will care about proof of your assets, so start compiling as much documentation as possible.

Be careful not to rely on electronic copies, however, warns Shelly Church, a certified financial planner and senior vice president of investments for Raymond James.

You don’t want to risk getting locked out of your information if a vindictive spouse decides to change the passwords to all of the joint accounts, so print everything out.

This includes bank account statements, tax forms, brokerage firm statements, and any financial documents you’ve signed in the last few years.

3. Get your hands on some Liquid Assets

The last thing you want is for a petty spouse to leave you without any cash, but it happens. Church recommends taking a proactive approach: “If there’s a joint account, [you] can actually set up an account just in [your] name and move a certain amount of assets over.”

Don’t wipe out the account, but make sure you have enough to cover your bills until attorneys can get involved. Otherwise, the only way to get access is to hold an emergency court hearing to get temporary child support or temporary alimony.

“That’s expensive and time-consuming, so if you can get some assets that are liquid, some cash that’s available, that’s very important and that will buy you a little bit of time,” Church explains.

4. Know what the Law says in your State

Divorce laws vary from state to state, starting with fault versus no fault states, so it’s important to know exactly what you’re walking into.

If you live in a state with community property laws, such as Washington, California, or Texas, you could lose half of everything that’s jointly owned in a divorce.

In these states, marital assets — and debts incurred by either spouse during the marriage — are divided 50/50. However, separate property (anything held in only one spouse’s name, including property owned before marriage, given as a gift, or inherited) is not taken into account.

5. Put Together a Finance Team

In addition to hiring an attorney, it’s important to have a trusted financial adviser in your corner — especially if your spouse was typically the one to handle the money. Find someone that you not only trust, but who is able to explain things to you in a way that you understand.

“If there’s a non-financially-savvy spouse, and they’re not really understanding, they sit in these meetings and smile and nod, then they should probably go to somebody they truly understand and somebody they’re connecting with,” Jacqueline Newman, a managing partner at a top New York City divorce law firm, told Business Insider.

Even if you’re well-versed in finance, it’s still important have an experienced family law attorney and a financial adviser on your team. Divorce is mired in emotion, so you’ll want non-biased parties to be able to speak on your behalf and ensure that you’re properly protected.

“You’re going to need someone to be speaking for you, because there’s a lot of emotion involved in divorce, whether you acknowledge it or not,” Church says.

6. Decide your Needs and Wants

“When you normally go through the divorce process, the lawyers are concerned with reaching an agreement for you to have a settlement,” Corey explains. “And they’ll say, ‘Can you live with this? Can you deal with this?’ They’re doing the best that they can to get the best deal or settlement for their client.”

But if you aren’t aware of what you need long-term, you could be agreeing to a settlement that you actually can’t deal with. What sounds like a big number at the time could fall incredibly short in reality. 

Take a wide-lens look at your finances: How much do you need to maintain your standard of living? How much will you need to support your kids?

What is the First thing to do when Considering a Divorce?

Once you know exactly what’s ahead of you, it’s so much easier to start working toward what you want. If you’re not sure where to begin, keep reading to find out exactly what to do before filing for a divorce. 

Hire a good divorce attorney

While it’s easier and less expensive if you and your spouse are able to settle your issues without litigation, if that’s not possible, make sure you have an attorney who’s capable and willing to litigate your case before a judge.

You’re basically looking for two things: an attorney who knows the value of settling quickly but who’s also willing to fight for you should the need arise.

Get an idea of where you stand financially

You’ll want to get a clear picture of where you and your spouse stand financially. One of the primary goals of the divorce process is to make an equitable distribution of marital assets and debts.

In order to get your fair share during divorce settlement negotiations, it’s important to understand all of your finances beforehand. 

First, determine what you own. Some marital assets are obvious. It’s clear that your home, any financial accounts, and vehicles are assets that should be split equitably.

Other not so obvious assets may include artwork, pension plans, inheritances, or belongings brought into the marriage.

Next, determine what you owe. It doesn’t matter whose name any debts are in, any money owed will be split based on who is more financially able to pay the debt. The easiest way to determine marital debt is to get a copy of your credit report. Any debt you have will be listed there.

Gather proof of income

Before filing for divorce, you’ll need documentation showing you and your spouse’s income. If you and your spouse are salaried employees, you will need a copy of your most recent pay stubs and your most recent Income tax return.

Determining income is a bit more difficult if you or your spouse is self-employed. In such a case, copies of bank account statements and financial business statements will give a clear picture of income.

It’s a good idea to make copies of these statements before filing for divorce. Even if you’re only able to get an estimate of what your spouse’s true income is, gather as much information as you can and your attorney can help get the rest.

Establish credit in your own name

After a divorce, it can be difficult to purchase a home or a car because you may have shared credit with your spouse for many years. That’s why it’s important to establish your own and build up a good credit score.

If you don’t have any credit in your name, you may want to establish some before you file for divorce. A simple way to do this is to obtain a credit card that’s in your name only.

Evaluate any joint financial accounts

It isn’t uncommon after learning there is an impending divorce for a spouse to raid financial accounts. Sometimes it’s done out of anger and sometimes it’s done on the advice of an adversarial divorce attorney.

Whatever the case may be, you’ll want to protect yourself and keep your spouse from being able to clean out any joint accounts you have together.

If you fear your spouse doing this, you can protect yourself by opening accounts in your name alone, remove half the funds from the joint accounts, and deposit them into your new accounts.

You don’t have to hide the fact that you’ve done this, but you’ll want to be sure not to spend the money foolishly. Document every penny you spend so that it can be accounted for it during settlement negotiations or in court.

If you have savings accounts, money market accounts, or any type investment accounts and you fear your spouse will tamper with those, you should consider having the accounts frozen.

Of course, you’ll want to discuss any action you plan to take regarding joint financial accounts with your attorney. 

Close all joint credit accounts

Before you separate, if possible, it’s best to pay off and close all joint credit accounts. Closing them before divorce proceedings will keep both you and your spouse from using the account and running up charges that you may later be held responsible for.

If you can’t pay accounts in full you can negotiate with a creditor to pay less than what is owed on an account.

If you’re able to do this, be sure to get a letter from the creditor that the account has been paid in full and a written promise that they will not file anything derogatory about the account to the credit reporting agencies.

If you are not able to pay off balances owed or come to a settlement agreement, you should have the accounts frozen. This will keep you from being able to use the account but it will protect you in the long run.

Once the divorce is final, the balance owed on the account can be transferred to the party the court holds responsible for the debt. If the responsible party does not pay the debt then you don’t have to worry about it affecting your credit score.

You’ll also want to contact and alert creditors to the fact that you are going through a divorce. If there is a change of address, make sure they know it so that you will continue to receive bills from all joint accounts.

Lastly, make sure all credit card bills are being paid. Divorce proceedings can take months and all it takes is one late payment to hurt your credit. Even if you have to pay the minimum on accounts that you know will ultimately be your spouse’s responsibility it will be worth it.

Set your post-divorce budget

Figuring out your post-divorce budget is the fun part. You get to determine what you will have to live on once you are divorced. It’s time to figure out what your costs of living will be after the divorce, keeping in mind that your income might drop drastically after such a major life change.

Because of this, it’s best to be prepared by building a budget now instead of being hit over the head with bills you can’t pay later on.

Like any budget, you can start by estimating your expenses so that you can get an idea of how much income you will need to support yourself.

This is also important because knowing this information can help you negotiate your divorce settlement. It’s helpful to know what you will need financially in order to evaluate your settlement options or what you may ask for should your case go to court.

Make the decision to stay or move out

Unless you’re dealing with an abusive situation, it’s normally in your best interest to wait to move out of your home until after the divorce proceedings are finalized. Although you might feel ready to live separately from your spouse, there are a few reasons to stay.

Firstly, moving out could affect the interest you have in the property. If you move out and your spouse pays the mortgage the entire time your divorce case is pending a judge may factor that into any decision they make about property distribution.

If the situation becomes too stressful and you feel you have to move, you can try to continue to pay a portion of the mortgage payment. Just be sure to document any payments you make toward the mortgage.

Additionally, if you have school-aged children and you hope to be able to remain in your family home until they finish school the last thing you want to do is leave the property.

If your spouse’s income is greater than yours and you want to negotiate them paying the mortgage or part of the mortgage, you may lose your ability to negotiate to keep the home once you leave.

Essentially, moving out of your home can have a negative impact on your case. Don’t do it without first discussing the issue with your attorney, especially because in some states, a judge will consider a motion from your attorney for temporary possession of the marital home pending divorce court. You can discuss this option with your attorney.

Read Also: How can I be Prepared to Weather a Financial Storm?

If there is domestic abuse and you are unable to get an order of temporary possession then it’s important to take whatever steps you need to protect yourself. Leave the home if you feel you are in danger.

If there is a history of domestic violence discuss it with your attorney because they may be able to legally have your spouse removed from your home.

Take the high road

Before and during divorce proceedings, you may want to be hypervigilant regarding your behavior. Anything that could be construed as inappropriate behavior could be used against you in court so it’s important to be aware of your actions. This is especially important if child custody is an issue in your case.

Instead of pursuing new relationships, consider spending time with friends and family instead until the divorce is final. Think about staying close to home and taking care of yourself physically and emotionally.

Divorce is never going to be an easy situation, but being prepared can help the tough process go more smoothly for everyone involved.