Financial Guidance During Separation and Divorce

Aug 9, 2024

Lecture Notes on Financial Advice During Separation/Divorce

Introduction

  • Tory is preparing for separation from her husband after 22 years of marriage.
  • Concerned about managing debt, specifically student loan debt.

General Advice

  • Seek Counseling: Even if the spouse is unwilling, it’s beneficial for one’s own emotional well-being and might provide clarity or even a wake-up call for the spouse.
  • Divorce as a Business Transaction: Emphasized that the emotional aspects are set aside, making it a strictly legal and financial matter.

Financial Advice for Managing Debts

  • Student Loans: They remain personal responsibility after separation.
  • Income Assessment: Tory's personal income is $50,000/year.
  • Hardship Deferral: Suggested deferring student loan payments due to financial hardship until stability is achieved.

Property and Assets

  • Home:
    • Worth: $200,000
    • Mortgage: $170,000
    • No significant equity
  • Cars:
    • Tory's car is paid for.
    • Husband’s car is not paid for but loan is solely in his name.

Credit and Banking

  • Credit Cards: Any jointly held credit cards should be closed immediately to prevent unwanted charges.
  • Bank Accounts: Ensure checking accounts are separated and not jointly held.
  • Other Debts: No other debts are jointly held except the mortgage.

Future Financial Planning

  • Housing: Tory cannot afford to keep the house on her income.
    • House must be refinanced to remove her name or be sold.
  • Debt Separation: Both parties keep debts tied to their own names (e.g., cars, credit cards, student loans).
  • Savings and Investments: Both have minimal savings in 401k.
    • Tory: $10,000
    • Husband: ~$5,000-$6,000

Legal and Financial Support

  • Alimony: Potential for alimony due to long marriage duration (22 years), especially given the income disparity ($50,000 vs. $90,000).
  • Representation: Importance of getting legal representation and preparing financially for legal costs.
  • Budgeting: Prepare for a minimalist lifestyle (cheap apartment, minimal expenses) to address debts and stabilize post-separation.

Emotional and Psychological Support

  • Counseling: Essential for navigating the separation emotionally and might help in reconciling if possible.
  • Pastoral Guidance: Seeking wise and godly counsel from a pastor or experienced marriage counselor for guidance on next steps.

Conclusion

  • Hope for Reconciliation: Emphasized the hope that Tory and her husband might turn things around with the right support.
  • Financial Prudence: Until the separation is finalized, focus on managing finances prudently and preparing for the future.

Final Thoughts

  • Encouragement to follow the channel for more advice and support.