5 Ways To Numb The Financial Pain Of Divorce
More than 80 percent of divorcing couples cite "debt and financial distress" as the primary factor in the dissolution of their marriages; Freedom Financial Network helps divorcing couples manage debt
(PRWEB) October 4, 2004
Whether it comes before or after the papers are signed, economic hardship is all too familiar to many couples who divorce. Following a few financial guidelines can ease the burden during this difficult time.
Each year, 1 million Americans will divorce. More than 80 percent of divorcing couples cite "debt and financial distress" as the primary factor in the dissolution of their marriages, according to an American Bar Association survey, and studies find that most families suffer a financial decline following a divorce. By taking steps to protect credit, families can come through in much better shape. Freedom Financial Network, LLC, a national consumer debt resolution service provider, encourages divorcing couples to take the following steps:
1. Accurately assess debts and liabilities. First, see yourself as your creditors do. Online (see www. myfico. com) or by phone, you can request a "tri-merge" credit report (a summary from all three major credit reporting bureaus). Note all of your existing shared and individual liabilities. Settle (or get a judgment) on how you'll allocate these responsibilities.
2. Plan how to handle your home. If you own a home, the mortgage is likely your most significant monthly payment. Be certain you understand how you'll resolve monthly mortgage payments, and how you'll divide the home's value - whether one partner buys out the other now, or the home is to be sold after children are grown.
3. Budget for payments. Create a detailed budget, based on your new income level, and use free cash flow to pay off debts. Most people find the most efficient way to pay off debts is to first pay off smaller bills - starting with under $100 - then pay off loans and unsecured debt, such as credit cards, beginning with the account with the highest interest rate.
4. Make sure your ex-spouse is making his or her payments. If possible, make provisions in the divorce agreement for reporting on resolution of significant debt. There are important implications for you personally if your spouse does not meet his/her end of the bargain on liabilities allocated through the divorce proceedings.
Call all creditors for shared accounts (credit cards, gas cards, department store cards, phone cards, etc.). Close the accounts if you are not carrying balances, or remove your name from jointly held accounts. Remember that for jointly held credit cards, and for any other debts incurred during the marriage in community property states, you have shared liability - and thereby share any potential negative credit rating impact. This means that if your spouse does not make payments after the divorce, it could come back to haunt you - and your credit rating.
If you owe back taxes, be aware that the IRS does not have to honor a decision from a divorce judgment. Consult a tax expert to help with your divorce tax planning.
5. Focus on rehabilitating your credit and financial health. Begin a savings plan. Reinvest any proceeds or equity that come out of the divorce proceeding, and be especially cognizant of building yourself a retirement fund for the future.
If you find yourself in trouble during this stressful time -- in which you must make many financial decisions -- seek help immediately from a reliable, professional debt resolution firm. Be sure to investigate the company you choose to assist you, and seek out a company that operates for the consumer, which is markedly different from credit counseling, debt consolidation, and debt management firms.
About Freedom Financial Network
Freedom Financial Network, LLC (www. freedomdebtrelief. com) provides comprehensive consumer debt resolution services through three divisions: Freedom Debt Relief, Freedom Foreclosure Relief, and Freedom Tax Relief. Helping consumers resolve their debts for the least possible personal cost, the company's services offer an alternative to bankruptcy, credit counseling, and debt consolidation.
Freedom Financial Network represents the consumer exclusively, and serves in a position of mediation and resolution to help clients minimize monthly payments, cut total debt balances, protect credit ratings from bankruptcy, and re-establish solid financial footing as quickly as possible. The company's 33-month Debt Resolution Program negotiates with unsecured creditors, often resulting in resolutions that save clients nearly 60 percent of debt balances.
Based in San Mateo, Calif., Freedom Financial Network serves more than 2,000 clients nationwide. The company manages more than $70 million in consumer debt, and is a member in good standing with the Better Business Bureau.
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