4 Costly Mistakes To Avoid in Your Divorce

The cost-effective divorce is, to put it bluntly, a myth. With legal fees, court costs, support payments, and the division of assets, it’s near impossible to keep the cost of divorce under $20,000. According to Thumbtack, most people spend $15,000 in attorney fees alone when going through a contested divorce. That said, people still strive to obtain a cost-effective divorce, and in their attempts to do so, they make costly mistakes. Below are just a few you should strive to avoid in your own divorce.

Giving Away Your House

Too many men assume that by giving their exes the family home they are suddenly free of all financial obligations associated with it. The courts may still order you to pay all or part of the mortgage. Even if you do get off clean, there is always the risk that your ex will stop paying the mortgage. If that happens, YOUR credit will suffer (assuming your name is on the mortgage). Worse than a drop in your credit score is the fact that credits will come knocking on your door for repayment. If you don’t pay the past due amount, your account will go to collections and the lender may file a lawsuit against you.

Letting Her Keep All the Stuff in the House

Almost as bad as letting your ex keep the house is letting her keep all your shared belongings. Yes, by letting her keep all your stuff you avoid the often-costly property division process. However, Cordell and Cordell law encourages you to consider what your avoidance will actually cost you. In addition to the furniture and holiday décor, your home also contains televisions, computers, laptops, tablets, and other costly devices. It also holds your antique collection, your grandmother’s china, artwork, rare books, and other items of value. If you were to take the time to value your property, you would be surprised by how much money you’re just giving away by letting your ex “just keep the stuff.”

Failing To Keep Adequate Financial Records

It’s not uncommon for one party of a relationship to take care of all the family’s financial obligations. According to a recent study, that party is usually the woman. While it’s okay for one party to ensure the bills are paid and the budget balanced, once you or your spouse utter the word “divorce,” it’s time to take an active interest in your finances.

Collect all bank and credit card statements. Gather account information for all joint, separate, savings, and retirement accounts. If your kids have savings accounts, gather statements for those as well. Call your bank and ask for copies of your mortgage loan documents, request documentation for will and trust agreements, and gather all records of your debts. Make copies of yours and your spouse’s income tax returns. Being without adequate documentation could mean the courts will force you to give up more assets than necessary AND order you to pay more in support than you can actually afford.

Assuming Your Bank Account and Retirement Plans Have the Same Value

On paper, your bank account and retirement plans may have, say, $50,000. To make things easier on yourself and your spouse, you consider letting her take the retirement while you keep the money in the bank. Cordell & Cordell urges you not to do this, as doing so could be a very costly mistake. While it’s true that your spouse will have to pay a penalty and taxes on money she withdraws before the account matures, if she DOES wait until the maturity date, the $50,000 will have grown into significantly more since the date of your divorce. Before agreeing to any kind of “trade,” it may be worth your while to consult with a CPA.

Unfortunately, unless you and your spouse agree on every aspect of your divorce, the cost-effective divorce will remain elusive to you. Don’t try to force it either, as doing so can result in you losing more money than you save in court and attorney fees. The best thing you can do for your bank account and your sanity is to work with a skilled lawyer who can advise you on what and what not to do while your divorce is pending.