Some Initial Steps to Take to Understand Your Financial Position
Get a copy of your credit report
A copy of your credit report will list all debt that is being reported in your name. This is the first place to start in the process of determining any outstanding liabilities. This report should contain any credit accounts that carry your name jointly with your spouse or any other person as well as credit that you have in your name alone. Don’t panic if you see accounts that your spouse opened with your name included you don’t remember the account or were not aware that it was opened. Unless it has a significant balance that you didn’t know about, this should not be a problem. Several credit reporting agencies gather the information you need. Although each agency probably has very similar information, some information may be unique to each agency. The following are steps to getting copies of your credit reports.
List Your Assets and liabilities
Now is the time to start a comprehensive list of your assets and liabilities. You may have difficulty remembering all of them at any one time and you will certainly need detailed information about them as you move toward settlement. It is also a good idea to get a current level of debt on open accounts so that you can establish the amount and ownership of charges that are made between now and settlement. For a template for keeping the information about your assets and liabilities, log into the website and go to the Downloads tab.
Gather documents
In evaluating your situation and preparing for the changes that may follow, you should have as much specific information as possible. If you have copies or important documents, you can show them to the various professionals that will be helping you and they can better evaluate your needs. The list below are some suggested documents that you may want to have copies in a file:
Insurance policies – life, homeowner’s or renter’s, auto
Registration or titles of vehicles (including boats & RV’s)
Last 3 year’s tax returns
Bank statements or electronic files like Quicken that contain spending records
Pay check stubs – can identify insurance policies, savings plans and deferred income as well as regular income
Credit statements – credit cards, credit union loans, mortgages, bank loans
Investment account statements – 401(k), IRA, brokerage accounts, credit union savings
Will or trust
Open a separate checking account
Most banks will not allow you to remove your name from a joint account. One person can close a joint account and take all of the remaining money but you can’t just remove your name. If you don’t want to close a joint account, at least let your bank know that you are separated and are no longer using the account.
Open a new checking account in your name at another institution from where you have joint accounts with your spouse. This will avoid any confusion on the part of your bank and prevent accidental co-mingling of funds. Banks are normally very good at keeping the money in the proper account and not letting an unauthorized person have access but accidents can occur when well-meaning staffs make an error while trying to provide excellent customer service. Having joint accounts and separate accounts in the same bank can be confusing.
Some Steps to Take to Protect Your Assets
Protect yourself from your spouse’s new debt
At the point that you decide you are getting a divorce, you should stop incurring new debt in joint accounts. If you remove your name from an account or close the account you will still be responsible for the existing balance but will not be responsible for new debt. Remember, just because your spouse agrees to pay off an account does not satisfy the creditor that you are not responsible for debit incurred when you were on the account.
To make sure that you are aware of all accounts in your name, get a copy of your credit report. Since not all creditors report to credit reporting agencies, this is not a fool-proof solution but it may alert you to accounts you have forgotten about (or never knew about). (Include how to get credit report copies). Notification should be in writing
Apply for Separate Credit
If you do not already have credit in your name alone, you should establish a single credit account, use it modestly and pay it faithfully. Your new bank may be able to help you or you can establish an account with a department store.
Identify Income and Establish a Budget (FINANCE)
Spending Freeze (FINANCE)
Review Current Expenses (FINANCE)
Ways to reduce living expenses
Depending on your living situation and your arrangement with your spouse, you may have to establish services such as cable and phone or you may be keeping the existing accounts. Below are some things to look at to save money on an on-going basis.
Phone Service – make sure that you are not paying for services or lines that you do not want
Cable – Time to dump those extra channels that you never watch? Maybe even go to another carrier
Auto Insurance – Remove your spouse from your coverage
Return unused clothes or products – Many retailers are very accommodating in accepting unused items.