Our case study below was published in Marcia DeLean Houck’s book
Living Life After Divorce & Widowhood:
Financial Planning, Skills, and Strategies for
When the Unthinkable Happens
Case Study Snapshot: Why Financial Planning Before Divorce is Critical
Couples often believe an amicable divorce using just one attorney is simple, especially when assets and debts seem straightforward. Yet, as this case shows, financial missteps can have lasting effects without expert guidance.
Linda and Tom believed their divorce would be simple. With minimal assets and debts, and an amicable agreement, they used a single attorney to finalize everything. But months after the divorce, Tom lost his job and couldn’t keep up with payments on their joint credit cards. Linda, whose name was still on the accounts, saw her credit score plummet, even though the court said Tom was responsible for the debt. When she tried to refinance her home, Linda was denied and eventually lost the house to foreclosure. Both Linda and Tom’s credit was severely damaged for years to come.
How This Could Have Been Prevented
Had Linda and Tom sought advice from a financial divorce planner before even hiring a divorce attorney, their outcome could have been dramatically different. Here’s what a planner would have recommended:
Educating both parties that divorce decrees don’t release you from your legal obligations to creditors.
Selling the house and splitting the proceeds, so neither person was left with more home than they could afford.
Paying off and closing all joint credit accounts, then opening new, individual accounts, ensuring that neither person’s financial future was tied to the other’s mistakes or hard times.
Splitting investments and retirement accounts fairly, setting both parties up to start fresh on their own.
The Result: Instead of years of financial fallout and stress, both Linda and Tom could have moved forward with clean credit and a fair start.
If you’re seeking an amicable divorce with for the best possible financial outcome, Divorce Money Matters has the expertise to help you avoid these common mistakes and protect your future.