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Rebuilding Financially After Divorce

Dealing with a divorce can be challenging, especially when finances are involved. Many couples realize that separation is inevitable and are prepared emotionally, yet aren't quite ready to handle the financial aspect of separation.

Reuters recently ran an article called YOUR MONEY: How to rebuild when divorce derails your retirement. It's important to note that after a divorce in Georgia, some couples find it challenging to be able to plan for retirement. This is because a divorce settlement may include part of a couple's retirement funds, which can drastically impact their ability to plan for retirement.

Student loan debt is a factor in many divorces

For couples divorcing in Georgia, it's not unusual for financial stress to be a factor that contributes to the split. One specific issue that's becoming increasingly common among divorcing couples is student loan debt, according to results from a study conducted by a debt management website. Student loan borrowers carry an average balance of just over $34,000. However, this amount may soon be closer to $40,000 based on recent trends.

More than half of all individuals surveyed said college loan debt contributed to their divorces. Furthermore, nearly 15 percent of borrowers specifically cited school-related debt as the reason for ending their marriages. Part of the reason for this trend may be rapidly rising college costs, which have gone up more than 60 percent over the past decade. The percentage of borrowers owing $50,000 or more has tripled within the same 10-year period.

Expert advice to make co-parenting work

While co-parenting may seem difficult, there are ways to make the process easier. As many divorced Georgia couples know, co-parenting succeeds when both parents work together to focus on the children's wellbeing. Fathers, in particular, often face an uphill battle because in many instances they are the non-custodial parent or have less time assigned with their children. Making that time count becomes very important, and communication, planning and organizing can the supporting pillars of successful co-parenting.

Communication is key to making anything work. Parents should be able to speak honestly and openly with each other while still maintaining an amicable relationship. If face-to-face communication brings about too much animosity, email, texting and other online apps could be better alternatives. The important thing is to maintain the communication flowing about issues regarding the children, including custody and child support. If there are disagreements, these should be resolved in private, away from the children.

Discovering hidden assets and unreported income in divorce

Financial deceit is unfortunately a far too common occurrence in high-asset divorces. It is not uncommon for the spouse that does not run the family business or handle the couple's finances to discover that their spouse is hiding funds and property.

If you suspect that your spouse is hiding assets, address this concern early with your divorce attorney and obtain adequate information to make an informed decision.

How bankruptcy can help with support payments

If a child support or alimony payment is considered to be a 'domestic support obligation," it cannot be discharged in bankruptcy. However, if it is deemed to be another type of marital property, it may be discharged in Chapter 7 or 13 bankruptcy. Furthermore, certain assets included in the property settlement portion of a divorce may be discharged in a Chapter 13 case.

This may be true if there is a hold harmless provision or cash is used to make a person whole in a divorce. For instance, instead of selling a home and splitting the proceeds, one person gets his or her portion of the equity in cash, and the other individual gets to keep the home. Even if a debt cannot be discharged in a bankruptcy, it may be easier to manage under a Chapter 13 repayment plan. The bankruptcy court will determine which debts hold the highest priority, and they will be repaid first.

More millennials seeking prenuptial agreements

Millennials in Georgia who are getting married may be more likely than their parents and grandparents to get prenuptial agreements. In the past 20 years, the number of people using prenups has increased significantly, but there is a particular surge in the 18-to-34 age group.

There are a number of reasons for this increased interest in prenups. One is that millennials are marrying later than previous generations; this means they have more assets to protect. Some millennial spouses may not want to lose significant assets such as retirement funds, stocks or real estate in a divorce.

Navigating divorce can be tricky for blended families

With high divorce rates, blended families are a reality. Second marriages, particularly those that involve children from a prior relationship, have an even higher rate of divorce. Some outlets report that the rate of failed marriages the second time around is 60 percent or higher.

When a first marriage ends, there are relatively clear roadmaps for how people should conduct themselves. We reassure the children that they are not responsible for causing the split. But the second time around, this may not be as easy to do.

Managing child support and a coparenting relationship

For some estranged Georgia couples with minor children, co-parenting after a divorce can be a difficult balancing act. It may require making judgments about what is best for the children in both the short and long run even when the answer is unclear.

For example, one couple divorced over financial issues and a disagreement about career and other goals. Several years later, the man had financial issues and was trying to put together a payment plan that would allow him to declare bankruptcy while keeping his home and car. At that time, he was unable to pay the full child support amount. However, when he contacted his wife and asked for more time to pay, she gave him a month to catch up on payments. When he did not, she turned to legal solutions.

Divorce can be a time of financial surprises

The financial aspects of a divorce can come as a surprise for people in Georgia who come to the decision to end their marriages. The process can shine a harsh light on marital finances, and many people may discover things of which they were previously unaware. In one study of 1,785 divorced or divorcing women, 46 percent of respondents said that they faced some type of financial shock during the process.

These financial surprises were felt by both younger and older participants in the survey. In fact, younger women were more likely than older women to have left financial matters in the hands of their husbands prior to the divorce. One of the most common surprises was the discovery of the full extent of marital debt, from credit cards to lines of credit to mortgage loans. In addition, the expenses after divorce often came as another surprise, from the fees and costs associated with the process itself to the cost of purchasing health insurance as a single person.

Considerations for those going through a divorce

While most Georgia residents do not actively plan for divorce, it may not be a bad idea. Each year, 2 million divorces occur in the United States, and the divorce rate in the country is about 50 percent. Prior to filing for divorce, an individual should research local and state laws that govern the process. Furthermore, a person should determine whether getting divorced in truly in his or her best interests.

Those who have children will want to make sure that their interests are protected throughout the process. This includes thinking about what type of custody arrangement may work best for them. In some cases, this means joint custody while in others it could mean one parent having custody. There are many financial consequences to getting divorced that an individual will want to get ready for. For instance, it will be necessary to create a new budget after the divorce as well as close joint accounts.

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At Hecht Family Law we understand that this is not only a very trying time for you, but that you want to get what you feel you deserve during the divorce process. We will always keep your end goal in mind.

Ready to rest easy tonight? Take a moment to contact Hecht Family Law. We offer free phone consultations, or you could send us an email to discuss your family law matter today.

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