Wednesday, March 23, 2011

6 Financial Mistakes to Avoid in Divorce

If anyone is facing a potential split, the whole thing sounds daunting. Here’s a quick list of financial pitfalls to avoid. Hopefully, a little more information helps empower you during the trauma involved in divorce proceedings.

From FOX

Divorce takes an emotional toll, and if you are not careful, it can often take an economic one as well. Protect your credit and come through divorce under the best possible financial circumstances by avoiding these common mistakes.

1. Trying to get even

Think twice about trying to exact financial revenge for wrongs committed against you in the marriage -- it could cost you in the long run. The more you argue over the division of assets, the more you'll end up paying legal and other professional fees, says Jeff Ivory, a partner with Stonebridge Financial Partners. Those fees could cripple you financially as you start your new life and affect your ability to get credit.

Instead, keep "the personal stuff" out of the equation, approaching the division of assets in as civil a manner as possible, he advises. Consider working with a financial professional or mediator instead of opposing attorneys.

2. Maintaining joint credit

Maybe you forgot that jointly held credit card, or maybe you agreed to keep the card open and accessible to both of you, for whatever reason. Either way, big mistake. "If everyone is cooperating, it works, but when someone doesn't pay or runs up debt, the other spouse remains liable," says Jerry Cohen, a certified public account specializing in financial forensics.

Before divorcing, pull your credit report from all three major credit bureaus -- Experian, Equifax and TransUnion -- and pay off jointly held cards, if possible. Otherwise, transfer any balances to one person's name and then close the joint accounts. If you're concerned that your spouse might open a joint account during the divorce proceedings, consider placing either a fraud alert or security freeze on your credit by contacting the credit bureaus.

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