When is the best time to get a divorce?
There is never an ideal time to get divorced, and separations are challenging for everyone involved — not just because of the emotional strife but also the financial fallout. Fortunately, both parties can take steps to get out of the separation in the best financial situation possible, as some of it relies upon timing.
Five best scenarios
Here are our five best scenarios to help you:
When you have minimal credit card debt
Before you consult a divorce lawyer or follow through with a legal separation, you’ll want a complete view of your financial picture, including all joint and individual obligations and debts. In most cases, it is not overly critical to the family courts when dividing assets and liabilities whether debts are held jointly by both parties or just one. So, suppose your ex-partner accumulated significant credit card debt during your marriage. In that case, unless it arose due to reckless or wasteful spending, it’ll reduce the net value of the combined assets and liabilities during the property division. When your ex-partner stops making payments for the debt before property division finalisation, you won’t be obligated to pay the debt unless you’re a joint borrower or guarantor.
When it is a seller’s market
Unless one of you receives your home as part of the separation settlement, you’ll be better financially if you part ways during a seller’s market. Each area is different and will go through various cycles, but look for periods when there is a higher demand than supply for properties in your area. Selling in a time of increased demand will maximise the value of 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.
When you have a good credit score
Individuals with a poor credit history may see their credit score worsen during a divorce. This issue is generally owing to a couple of missed bills while the agreement is between settlements. If you are moving out of your current home, you will want a credit score allowing you to rent or purchase a new home and/or a new car.
Before an inheritance
When you are aware of an inheritance coming your way, it is an important variable to consider when approaching a divorce. Whether assets or money inherited after the divorce will be part of the divorce settlement depends on several factors. Generally, any future asset won’t be considered in the separation agreement when calculating the value of the divisible property. Still, it will form part of any settlement terms as a future financial resource of the party receiving the inheritance if it is close to being acquired. You should seek tailored advice to consider your circumstances. An inheritance received before you separate is more likely to be shared with your ex after separation, but you should get tailored advice.
When your children are in high school
There will never be an ideal time to separate, especially when children are involved. Nonetheless, separating while your children are in high school may be the best time when considering your finances. 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 family law experts today for free family law advice to help you put a plan in place.