divorce and your credit score

How Will a Divorce Affect my Finances?

Whether you are in Auburn or anywhere else in Alabama or around the country, getting divorced is expensive. Not only will there be large one-time costs to pay for attorney fees, legal filings, etc., there are also likely to be some adverse ongoing financial consequences as well.

About one out of every five women fall below the poverty line after a divorce, and most men experience a large drop in their standard of living as well. A divorce can also have adverse financial effects on the children.

Here are some of the most significant ways an Auburn divorce may affect your finances:

  • Lower Income: Although Alabama law calls for the payment of child support and in some cases spousal support, those payments will be less the combined income the couple had when they were together. The paying spouse will also have a reduced income because of the payments, which means that both spouses will probably have a lower standard of living at least in the short term.
  • Fewer Assets: When you are married, you own all of your assets together. After the division of property, you will probably end up with around half of the marital estate. This, of course means a lower bank account balance, less money in your retirement account, and a diminished amount of other property.
  • Higher Expenses: When a couple gets divorced, they are now faced with having to support two households on the same combined income. This means double the housing payments, double utilities, and probably higher food costs as well.
  • Damaged Credit: Your credit is not directly affected by a divorce; in other words, the credit reporting agencies will not lower your score simply because your marriage was dissolved. However, the indirect effects of a divorce can damage your credit score. For example, your spouse could run up credit card bills on a joint account that has your name on it. Or you might have to use more of your available credit to cover short-term expenses. Either of these or similar scenarios can result in a lower credit score.
  • Fewer Opportunities for Children: With a diminished income, you may not be able to afford some of the “extras” that you want for your children, such as paying for sports leagues, music lessons, extra tutoring, or private school. It might also be more difficult to contribute to any college fund you have set up for your kids.
  • Tax Consequences: Once you are divorced, you will have a different filing status and you might end up in a different tax bracket. There may also be other tax implications if you have to sell the marital home, sell a business, or make other major financial decisions.

Surviving Financially after an Auburn Divorce

What we have discussed so far in this article sounds pretty grim. But this is reality – divorce is hard financially, and you need to be mentally prepared for it.

All of that said, getting divorced does not mean you will have adverse financial circumstances forever. There is definitely an adjustment period, but you will get through it, and many people even come out financially stronger on the other side.

Here are some ways to deal with the financial impact of a divorce:

  • Understand your Finances: Take an inventory of your income and assets, so you have the full picture of what you will be dealing with going forward.
  • Decide What you Can Afford: It may be tempting to want to stay in the marital home for sentimental reasons, but it might not make financial sense to do so. Take a look at what housing payment you can afford and plan accordingly.
  • Create a Realistic Budget: Understand that you will need to live on less and make a budget that you will stick to. Budgeting is not the most enjoyable thing to do, but your ability to live within your means is the first step toward financial freedom.
  • Protect Your Credit: Take immediate steps to mitigate the effects of the divorce on your credit. Close any joint credit accounts so your spouse will not be able to cause you any damage. Also, try to open some accounts in your name only, so you have more available credit in case you need it.
  • Think About Ways to Increase your Income: Your income will take a short-term hit, but it does not have to stay this way forever. If you are not already working, consider re-entering the workforce if that is an option for you. You may also want to look at getting additional schooling which might open the door for better opportunities, or if you have an entrepreneurial spirit, maybe there is a business you have always wanted to start but felt inhibited to do so by your marriage.
  • Seek Professional Financial Guidance: Not everyone is strong in the area finances, and you might need some professional help to get you grounded in this area. If so, find a reputable financial advisor who can help you create a solid plan going forward.

Work with an Experienced Auburn, AL Divorce Attorney

Because of the adverse financial effects of a divorce, you will need a lawyer who has extensive legal experience and is committed to advocating forcefully for your best interests. In Auburn, Opelika, and the surrounding communities, get in touch with Alsobrook Law Group today for assistance. Message us online or call our office at 334.737.3718 to schedule a free consultation. We look forward to serving you!