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How to Overcome Post Divorce Money Issues

written by: AlexisW•edited by: Laurie Patsalides•updated: 2/17/2010

Post divorce can create financial problems for the couple involved. Many post divorce money issues exist, from struggles about finances to concerns about life insurance, pensions, lingering debts and other such issues. Read about some common issues and how to overcome them, here.

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    Common Post Divorce Money Issues

    Both men and women face post divorce money issues. Often, one spouse whose career was impacted by raising children may find him or herself needing to reenter the workforce. One spouse may also find him or herself having to pay alimony, child support or both. Both parties may need to pay off the cost of the divorce itself. Add lingering debt from a marriage and other ramifications of dissolving combined assets to this, and most couples are sure to struggle financially.

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    Household Budgeting Problems

    While two don't live quite as cheaply as one, it is close. Couples who separate and divorce now find themselves needing to support two homes. This can mean two mortgage payments or rent payments, as well as other additional household expenses. While affording these bills may be most difficult for a non-working spouse who has to find a job after divorce, these issues can exist even when two parties were working or when there are no kids involved.

    With a smaller income, it is essential to begin budgeting as soon as you can after a divorce. Make a list of your fixed monthly expenses. Compare this to your monthly income. If your expenses exceed your income, then it is important to start cutting back. Consider whether the expensive house you had when you were married is affordable on your salary. Track your spending to find other ways to cut expenses.

    Budgeting can be especially hard when you have children. Many parents want to compensate for divorce by showering their children with gifts. This guilt-induced spending ultimately does not help your children in the long run and can create serious problems for your family's financial picture.

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    Lingering Debts

    When you are married, if you both sign for a debt, that debt belongs to both of you. Regardless of what your divorce decree says about who is responsible for the debt, creditors can and will come after both spouses whose names are on the loan. This means, if your ex-husband or ex-wife charged up the credit cards through purchases, then the credit card company may still come after you for this money even if your spouse agreed to pay it in the divorce decree.

    Insist on trying to pay off as much debt as you can before the divorce papers are signed. This may mean selling or liquidating assets, but it is often worth it to do so for the peace of mind of knowing you will never have to pay your ex's debt.

    If you can't raise enough capital to pay off debts, make sure you insist that you can still have access to account statements so you can verify that payments are being made. This way, you can protect your credit by making payments if your spouse defaults. You can and should make these payments to protect your credit, since creditors can sue you anyway if your name is on the loan. If your divorce decree says your spouse is responsible, then you can go to court with the bills and ask a judge to mandate your ex-spouse's monies to pay you back after the fact.

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    Shared Assets

    You and your spouse may have shared many assets while you were married. The resolution of these assets should be determined before you sign the divorce papers as part of your divorce settlement. Still, remember to change documents such as beneficiaries on life insurance policies or IRA's. Even if you are divorced, the money will go to your ex-spouse if he or she is named as the beneficiary on your life insurance policy, so it is imperative to take care of this before the divorce is final.

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    Insurance Costs

    If one spouse was covered under the other's health insurance, he or she may face a problem of not being insured upon divorce. In some cases, you can negotiate to remain on the insurance plan as part of your divorce settlement. However, if an employer is footing the bill, you may have to pick up the additional premiums the employer was paying since employers will not cover ex-spouses. Cobra may be available for a period of time, but again, you or your spouse will have to pick up the tab for the premiums.

    Look into obtaining your own coverage as soon as possible after the divorce. If you cannot afford monthly payments for health insurance, then learn about the types of financial assistance available in your state. Find out if you qualify for Medicaid coverage, or another financial assistance plan, until you are able to find your own source of health insurance.

    You may also find yourself having to pay more for auto insurance, renters or homeowners insurance, or any other type of insurance in which you were on your spouses policy.