Do your own divorce
In this section we will discuss the financial aspect of divorce and changing financial situations.

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Divorce affects every aspect of your life especially your financial situation. A reality of divorce is that your lifestyle is bound to change, and not necessarily for the better. The sooner you can accept this reality, the better off you will be. It may not be permanent, but chances are it will, especially if there is a large disparity between salaries and earning potential. Keeping this in mind, you will need to carefully think through all your financial decisions. If possible it is best not to make any major purchases, such as a new car, or another residence. During a divorce is not the time to act impulsively.

You can also save a lot of money by doing the following:
  • Know your state laws regarding division of property - assets as well as liabilities.
  • Evaluate what you have.
  • Consider the tax consequences.
  • Negotiate fairly.
Hard as it may be, you should try to treat the financial part of your divorce as if you were dissolving a business partnership. Don't let your emotions interfere with your financial decisions. You may love your home, but the reality may be that you simply cannot afford it any longer. A costly mistake some people make is to seek revenge through the finances. No matter what you may think, you are not entitled to everything. Every state has individual law and statutes that are followed when splitting assets and determining child support and alimony. If you take the stance of "I'm going to wipe him/her out" you will probably end up wiping yourself out as well. Everybody loses in that situation.

It is in the best interest of both parties involved to cooperate fully when it comes to financial issues. If you can't agree on financial (or any other) issues, you will end up in court with a judge making the decisions. Judges don't care about the emotional issues of your divorce when making financial decisions. Generally they don't concern themselves with issues such as tax consequences either. That reason alone should be sufficient motivation to negotiate as much as you of your settlement as you can.

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How divorce affects your future retirement benefits
If you are divorced after at least 10 years of marriage, you can collect retirement benefits on your former spouse's Social Security record if you are at least age 62 and if your former spouse is entitled to or receiving benefits. If you remarry, you generally cannot collect benefits on your former spouse's record unless your later marriage ends (whether by death, divorce, or annulment).

How divorce affects survivors benefits
If your divorced spouse dies, you can receive benefits as a widow/widower if the marriage lasted 10 years or more. Benefits paid to a surviving divorced spouse who is 60 or older will not affect the benefit rates for other survivors receiving benefits. Unmarried children under the age of 18, (up to age 19 if they are attending elementary or secondary school full time) are entitled to survivor benefits if your former spouse passes away. The child would also be entitled to survivor benefits if he or she was disabled before age 22 and remained disabled. Under certain circumstances, benefits can also be paid to stepchildren, grandchildren, adopted children or dependent parents age 62 or older.

How remarriage affects survivors benefits
In general, you cannot receive survivors benefits if you remarry before the age of 60 unless the latter marriage ends, whether by death, divorce, or annulment. If you remarry after age 60 (50 if disabled), you can still collect benefits on your former spouse's record. When you reach age 62 or older, you may get retirement benefits on the record of your new spouse if they are higher. Your remarriage would have no effect on the benefits being paid to your children.
Benefits paid to a surviving divorced spouse who is age 60 or older (50-60 if disabled) will not affect the benefit rates for other survivors getting benefits.

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No Will
Laws vary from state to state on who is entitled to an inheritance, and in what percentage of the estate they are entitled to, when there is no will. Without a valid Will an intestate estate is distributed to beneficiaries in accordance with the distribution plan established by state law

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Of all the assets that you have perhaps the hardest to protect is your credit rating. It is very easy to let your credit rating deteriorate during a divorce. You might not think maintaining or establishing a good credit rating in your name is very important, you will one day find out exactly how important it is to your financial well being. Under certain circumstances it is sometimes unavoidable that credit rating is effected, but you can take steps to maintain a good credit rating.
  1. Get a copy of your credit report. The Fair and Accurate Credit Transactions Act of 2003 gives every consumer the right to their credit report free of charge every year. Get a copy from each of the major credit bureaus as the information may vary from credit bureau to credit bureau. Go over every detail of the report. If there are items or sections of the report you don't understand then call the credit bureau that you received the report from and ask them to explain it to you.

  2. If you believe any of the information on the report is inaccurate, notify the credit bureau. They will verify your information with the creditor and send you an update. If you disagree with the outcome you are entitled to add your own statement to the credit report.

  3. 3. Make sure that your bills are not paid late. If you think you will hurt your spouse by not paying your bills on time during your divorce you are absolutely right. However the problem is you will also be hurting yourself. If the account is your name only then you are only hurting yourself. When you opened your joint credit account you and your spouse became contractually obligated to pay the debt. A divorce decree or property settlement agreement does not change that liability, even if it states that one person is responsible for the debt. If your spouse does not pay the debt the creditor can and most likely will seek payment from you. Your actions of not paying or paying late will remain on your credit report for the next seven years.

  4. You can place a fraud alert on your credit report. If you are willing to give up the opportunity to get instant credit you can notify both Trans Union and Experian credit bureaus to add a statement to your credit report requesting creditors not approve new accounts without calling you first. This will protect you from people opening credit accounts in your name. Unfortunately, Equifax does allow you to add this statement to your credit report unless you are already the victim of fraud.
A credit report is information compiled about your credit payment history. All accounts in your name or any account opened jointly by you and your spouse after June 1, 1977 will appear in the report. If your spouse has an individual credit account and has authorized you to use it, that account will also appear in the report.

Banks, retail stores, credit card companies and other lenders report to credit agencies. Public record information such as tax liens, bankruptcies or judgments against you also appear on your credit report.

Federal law regulates who may access your credit report and the reasons for accessing it.

The three major credit reporting bureaus are:

PO Box 740241
Atlanta, GA 30374-0241
800-685-1111 To order your credit report
800-525-6285 To report fraud

Experian (formerly TRW)
PO Box 1017
Allen, TX 75013
888-397-3742 To order your credit report
800-301-7195 To report fraud

Trans Union
PO Box 390
Springfield, PA 19064
800-916-8800 To order your credit report
800-680-7289 To report fraud

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Consult a bankruptcy attorney as to the implications of filing for bankruptcy. The implications can last for 10 years and may not be in your best interest depending upon your circumstances and the results you were looking for.  Bankruptcy is not always the easy way out of debt or your best solution.

Beginning October 17, 2005, consumers filing for bankruptcy will be required to go through a government-approved credit counseling program within six months before they file for bankruptcy protection.

Some filers with higher incomes won't be allowed to use Chapter 7, but will instead have to repay at least some of their debt under Chapter 13

Under the old rules, most filers could choose the type of bankruptcy that seemed best for them -- and most chose Chapter 7 over Chapter 13. The new law will prohibit some filers with higher incomes from using Chapter 7. Under the new rules, the first step in figuring out whether you can file for Chapter 7 is to measure your "current monthly income" against the median income for a family of your size in your state. Your "current monthly income" is not your income at the time you file. Rather, it is your average income over the last six months before you file. If your income is less than or equal to the median, you can file for Chapter 7. If it is more than the median, however, you must pass "the means test" -- another requirement of the new law -- in order to file for Chapter 7. The purpose of the means test is to figure out whether you have enough disposable income, after subtracting certain allowed expenses and required debt payments, to make payments on a Chapter 13 plan.

Several types of debts are not dischargeable in bankruptcy court such alimony, child support and student loans. In addition if you and your spouse are jointly named as a debtor only you will discharged from the responsibility of paying the creditor. But, if your divorce settlement states that you are responsible for any part of that debt, then your spouse can collect from you the portion that you are responsible for if the debt is paid.

For more information about Bankruptcy and debt management go to

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Every state is different, but if you and/or your spouse have a pension it will most likely be subject to some form of equitable distribution.

Few areas of equitable distribution seems to upset people more than splitting a pension, especially if one party has worked outside the home and the other party has not.

If you are young, your retirement funds are not something you give much thought to. Going through a divorce will change that. As with every other decision you make during your divorce, what you decide about the division of the pension will affect your lifestyle. The only difference is that you won't feel the effects until it's time to retire. It's important to keep in mind that what was once going to support one household in retirement must now support two. This is a good opportunity to see exactly what you have and what you will need for your retirement and start planning for your own individual retirement.

Pension plans are complex and each plan is different. You and your spouse may be able come to an agreement on how to split it, but to obtain the valuation will require an expert. Depending on the type of plan that you have, the "real" value may differ from the value the court assigns to it.

The value of the pension will also vary depending upon your individual state's laws regarding when the pension becomes qualified for equitable distribution and as of what date the pension is to be valued. If you had a large pension before your marriage, that portion of it may be considered a pre marital asset. In addition the date to be used to determine the final value of the pension may be the date the divorce complaint was filed. Your attorney would be able to answer these questions for you.

Pension plans are an asset and can be used as a bargaining tool when negotiating your final settlement agreement. But beware; trading off the pension for an asset may not be in your best interest. Remember the real value of the pension and the values assigned by the court are not always equal. Consult a professional before making any decision to give up your share of the pension.

The QDRO Quandary

A QDRO (pronounced 'quad dro' and stands for Qualified Domestic Relations Order) is a separate court order awarding a share of the pension to each party in the divorce.

Immediately upon filing for your divorce you must take action on the division of any pension that qualifies for equitable distribution. As the beneficiary of the plan you should contact the plan's administrator and request of the summary plan description. Once you obtain this description you can determine your rights under the plan. Each plan is different so you must find out the specific requirements of the pension in order to acquire your portion. It is your attorney's responsibility to prepare the QDRO. If the QDRO is not prepared according to the plans specifications it will not be honored. This will cost you additional money in attorney fees as well as putting your distribution at risk.

It is very important that all pension issues be settled before the divorce is final. Even if the pension is included in your settlement agreement and you don't get the QDRO when the divorce is finalized you will have to go back to court to obtain it. This may be putting your share of the pension at risk. In a recent court decision (Hopkins v. AT&T Global Information Solutions Co. No. 96-1363, US Court of Appeals, 4th Circuit, January 24, 1997) if the QDRO is not prepared and submitted until after the divorce, and your former spouse remarries and retires before the submission, the QDRO may not be enforceable. His or her current spouse would become vested for the surviving spouse benefit.

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