Have you heard the one about a freshly-divorced woman who was having a drink with a wise old friend?

“Why is divorce so expensive?” she asked.

“Because it’s worth it,” her friend answered.

That’s how every divorcee wants to feel once the split is finalized, but the financial upheaval and stress can take you places where you’ll need a stiff drink. Or worse, a bankruptcy attorney.

Divorce: A Major Cause of Financial Stress

On a scale used by the American Institute of Stress, divorce ranks behind only the death of a spouse as a cause of stress. Financial strain invariably comes with the package.

The typical divorced person needs a 30% increase in income to maintain the same standard of living he or she had while married. That might be difficult when half (or more) of your income just walked out the door. It does help explain why divorce accounts for 8% of bankruptcies in the U.S.

Not only does a two-income household often become one, there are legal fees, division of assets, child support and alimony issues. People use credit cards to pay bills that used to be easily handled by two incomes. You realize you are entering a new normal, and it’s rarely as financially pretty as the old one.

That often becomes clear soon after the judge slams down the gavel. You think you’re finally rid of your ex and the slate is wiped clean. Then you find out that he or she is stuck like a piece of gum on the bottom of your wallet.

The divorce decree is the final ruling that makes divorce official. It summarizes the rights and duties of each party and divides the property and financial obligations.

Get Out Of Debt Before Finalizing Your Divorce

The best strategy is to pay off all debts before finalizing your divorce. That’s often not possible, however, so the obligations are split. For instance, the woman makes the car payments. The man is responsible for the mortgage payments.

Trouble begins when they either can’t or won’t pay up. Mortgage companies, credit cards and other creditors are not parties to the divorce decree. They don’t care who spent $4,392 on a post-divorce party cruise to Cozumel. They just want their money. If your name is on the account, you are on the hook regardless of what your divorce decree says.

The simple solution: Don’t have any joint accounts.

Try to close them all and refinance the house, car and other loans in one person’s name. Cancel shared credit cards and transfer the debt to cards in each person’s name.

This is where maintaining a civil relationship with your ex comes in handy. Figuratively speaking, it’s much easier to get the house in new financial order when the other inhabitant doesn’t hate your guts.

Rebuilding Credit After A Divorce

Building credit after a divorce can be difficult, especially if you are still financially linked to an irresponsible ex. You might have to work with your ex if you can’t refinance your mortgage or other major debt. Among the options are setting up a joint bank account that will allow you to monitor payments. Encourage your ex to sign up for automatic withdrawals.

The goal is to limit your exposure to potentially bad behavior by your ex. They have a lot of power, especially if they don’t mind trashing their own credit rating just to make your life miserable.

If your ex fails to pay on time, debt collection agencies can and will start bothering anyone whose name is attached to the account. You can explain the situation to the agency and the creditor, but they are under no obligation to cut you any slack.

Bankruptcies stay on your credit report for 7-10 years. You’ll have a harder time getting loans and will pay higher interest rates after you declare bankruptcy.

Nobody ever said divorce is easy. But if you have a sound financial strategy, you won’t need a stiff drink to feel it was worth it.


(Waite, L. and Gallagher, M.), (ND). What are the possible financial consequences of divorce? Retrieved from http://www.divorce.usu.edu/files/uploads/Lesson7.pdf

(NA), (ND). Wipe Out Debt, Keep What You Have. Retrieved from http://www.divorcesource.com/ds/encyclopedia/creditor-s-rights-1937.shtml

(NA), (ND). Divorce and Credit. Retrieved from https://www.experian.com/credit-advice/topic-divorce-and-credit.html

(Landers, J.) (2012, Nov. 27). Three Types of Financial Mistakes Divorcing Women Make (And How To Avoid Them). Retrieved from http://www.forbes.com/sites/jefflanders/2012/11/27/three-types-of-financial-mistakes-divorcing-women-make-and-how-to-avoid-them/#dba4e0637129