Most people in Michigan, when they learn that their marriage is about to end, ask many questions about the divorce process. Many of these questions are directed at friends who have already gone through the process. Unfortunately, no two divorces are identical, and people’s advice about divorce are based upon their personal experiences. This post will be directed at expert advice on one of the most difficult aspects of divorce: the couple’s financial affairs.
The first question: Are you making ends meet?
Divorce does not create income; instead, it creates significant increases in living expense. Thus, one of the first questions to answer is whether a person has enough income to make ends meet and whether the answer will be the same after the divorce. One of the first areas to examine is credit card expenses. Are the cards used for one-time expenses where the balance is retired over time, or are the cards used to supplement daily living expenses. Thus, a person facing divorce should make a complete and accurate list of all credit card balances and determine if the card balances can be retired without an increase income.
Next question: Does an individual want to remain in the family house?
In most divorces, the family residence is the single biggest asset, and it probably accounts for the majority of the couple’s debt. Whether to stay in the house acquires additional emotional difficulty if the couple has minor children. The first question to answer is the amount of money required to pay for the household expenses. How much is spent on maintenance? Does the house require major repairs, such as a new roof? These expenses should be carefully estimated and compared to a person’s estimated post-divorce income.
Third question: What is the employment situation of each spouse?
Many people entering into divorce assume that the court will order the payment of alimony to the spouse who is earning the lesser income. This assumption may no longer be true. Also, even if the court orders alimony, it may not be sufficient to close the gap between after-divorce income and expenses.
Fourth question: Can a person afford his or her post-divorce life?
Answering this question requires a person to be realistic about ordinary monthly expenses such as food, cost of housing, medical car, paying debts and the like. A person must also squarely face the questions of child support and alimony.
Last question: The cost of the divorce
Paying for lawyers, accountants and other experts is not cheap. Most divorcing couples are well-advised to pursue procedures that will not result in a court trial. These procedures include mediation and collaborative divorce.
Answering most of the questions listed above will require the assistance of an attorney, accountant or financial planner. Perhaps the most useful first step is a consultation with an experienced divorce lawyer who can assist in formulating answers to these financial questions.