Financial Responsibilities During a Divorce

Financial Responsibilities During a Divorce
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A number of financial issues need to be resolved when getting a divorce. Not only are you and your spouse dividing financial assets, you must also split the debt. Until a divorce is finalized, you might be responsible for financial obligations such as child support, continued payments on credit card debt and costs associated with maintaining the family home, even if you aren't living in it.

Child/Spousal Support

A hearing might be necessary to determine the amount of temporary child support an/or alimony until the issues of final custody and support amounts are resolved. This generally occurs only if a husband and wife cannot agree to terms between them. In some cases, the spouse who earns the higher wage or who was the family’s primary provider might agree or be ordered by the court to make temporary support payments for a specified length of time. Usually, the parent with whom any children will live for the most days receives child support. A spouse who earns no income or less income might also be able to receive temporary spousal support. Your county’s Domestic Relations Office can help calculate financial obligations for paying child support, spousal support and sometimes even the division of property.

Joint Accounts

Although joint banking accounts are sometimes frozen until all financial decisions are made and included in the divorce proceedings, when it comes to debt, joint credit accounts continue to be the responsibility of both spouses. Spouses might opt to pay off joint accounts if they have the funds available. Another option is for you and your spouse to meet with the bank or other creditor for the purpose of determining if a debt can be transferred into the name of just one person. In that case, the spouse assuming the debt would be responsible for continuing to make the payments. If you live in a community property state, you could also be responsible for paying part of any individual debts your spouse incurred even without your knowledge. Request that your attorney put everything in writing, specifying in the settlement agreement the debts for which your spouse is responsible for paying after the divorce is final.

Family Home

During the divorce process, both spouses still have a financial responsibility for maintaining the family home. If both names are on the mortgage loan, each party holds equal responsibility for paying that mortgage until it is determined who gets the house, or if the house is to be sold. It does not matter if one of you no longer lives in the home. Even if you and your spouse agree that the one who remains living there will be responsible for making the mortgage payments, if that person fails to make timely payments, it hurts the other person’s credit. Personal finance expert, Suze Orman, recommends refinancing the mortgage right away. By taking your name off the mortgage loan, you won’t be responsible if your spouse defaults or makes late payments, and your credit history will be protected. One way to handle this situation until the home is sold or refinanced in the other person’s name is to make the mortgage payments to an escrow company to ensure that the mortgage loan is paid on time. Each spouse should also continue to pay any other household bills on which his or her name appear.