When (financially speaking) is the best time to get divorced?

There is never an ideal time to get divorced, and separations are hard for everyone involved — not just because of the emotional strife, but also the financial fallout. Fortunately, both parties can take some steps to come out of the separation in the best financial situation possible as some of it relies upon timing.

Here are our five best scenarios to help you:

1. When your credit card debt is minimised

Before you decide to consult a divorce lawyer or follow through with a legal separation, you’ll want to get a full view of your financial picture, including all joint and individual obligations and debts.  In most cases it is not overly important to the family courts when dividing assets and liabilities whether debts are held jointly by both parties or just one of them.  So if your ex-partner has accumulated a lot of credit card debt during your marriage, unless it arose as a result of reckless or wasteful spending by your ex-partner, it will reduce the overall net value of the total combined assets and liabilities when dividing the property.  If your ex-partner chooses to stop making payments for the debt before you finalise your property division, you will not be obligated to pay the debt unless you are a joint borrower or guarantor.

2. When it is a seller’s market

Unless you’ve decided that one of you will receive your home as part of the separation settlement, you’ll be in a better financial situation after your separation if you part ways during a seller’s market.  Each area is different and will go through different cycles, but look for periods when there is a higher demand than supply for properties in your area.  Selling in a time of high demand will help get the maximum value for your home which will cover your outstanding mortgage and leave enough left over for both of you to share.  If the housing market is doing well, an option may be to agree that one of you get the house as part of the settlement.    

3. When you have a good credit score

Individuals with a poor credit history may see their credit score worsen during a divorce.  This is generally owing to a couple of bills being missed while the agreement is in between settlement.  If you are moving out of your current home, you will want a credit score that will allow you to rent or purchase a new home and/or a new car.

4. Before an inheritance

If you are aware of an inheritance coming your way it is an important variable to consider when considering a divorce.  Generally, any future asset won’t be taken into account in the separation agreement when calculating the value of the divisible property, but it will be mentioned in any terms of settlement as a future financial resource of the party to receive the inheritance if it is not far away from being received.  Whether assets or money inherited after the divorce will be brought into the divorce settlement depends on a number of factors and tailored advice should be sought to take into account your individual circumstanes.  An inheritance received before you separate is more likely to have to be shared with your ex after separation, but again tailored advice should be sought.

5. When your children are in high school

There will never be an ideal time to separate especially when children are involved.  Nonetheless, when your finances are taken into account, separating while your children are in high school may be the best time.  The Child Support Agency or the court may require child support to be paid by one of the parties, but it will only be for a few years.

If you are veering towards separating from your spouse, we highly recommend having a financial strategy.  Talk to our team of family law experts today for free family law advice to help you put a strategy in place.

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