Love gone wrong? Don't let divorce ruin your finances
We’ve all heard the statistics, “one in three marriages will end in divorce”, but we never assume that we ourselves will fall into that classification
Today, we are fortunate to live in an era where divorce is not the ‘be all and end all’. There are about 132 divorces 1 in Australia every single day, and despite your feelings right now, most separations turn out for the better.
No matter how your friends and family try to sugarcoat it, divorce can be a complicated and long process. The journey will be emotional and at times frustrating, but in many ways, this can be a fresh start for both parties.
Before you get there, accept that there will be big changes; the physical, mental and emotional demands of a divorce leave many spouses feeling out of control, especially when it comes to money.
So how can you keep a handle on costs? Below is a basic guide to common costs incurred and what you can do to stay in control:
1. When you can’t agree about money/parenting
Besides the potential loss of assets, legal fees are the most escalating costs in a divorce. Do you and your spouse have a say in how much you will pay? Absolutely…
There are four approaches to resolve disagreements when dividing assets and responsibilities during a divorce. The ‘Kitchen Table Divorce’, with a mediator, with a collaborative team or with traditional litigation.
If you are able to use the Kitchen Table Approach successfully, you will spend the least money. If you litigate, you will spend the most. Mediation and Collaborative Divorce will fall somewhere in the middle.
The catch? The first three options require your spouse’s cooperation. If there are significant differences in parenting, then working with a Child Specialist may save you the expense and heartache of a custody fight. If there are significant differences in asset allocation and support, then working with a Mediator or a ‘Financial Neutral’ in the Collaborative Divorce process might also be a cost saver. If you and your spouse can’t cooperate at all, then litigation may be your final option.
COST: The quicker you can come to a mutual arrangement, the quicker your solicitor can draft up your divorce agreement and have it lodged. Solicitors charge by the hour and this can range from anywhere between $400- $1,000 per hour, PLUS $3,000-$8,000 in court fees per day – should you go down the litigation route.
Remember, solicitors will charge you for every minute spent working on your case. This includes the initial consultation, time spent on the phone talking to you or the other party’s representative, and time spent emailing and preparing documents. You can keep costs in check by going prepared to your meetings with questions and answers. Ask for a fixed price quote.
Keep it strictly business (your lawyer is not your friend) and state your absolute bottom line from the get go. This will help to speed up the negotiation process without further back and forth conversations.
2. Dividing property
If you and your spouse own properties together and agree to sell and split the profits, the process can be relatively straight forward. If, however you decide that one party should keep the property, then you can add these additional fees to your divorce bill:
- — Mortgage refinancing fees
- — Home appraisal
- — Titles Office fees
- — Conveyancing legal fees
3. Moving on…
Transitioning from a dual to a single income household brings many financial challenges, particularly for women.
Do you have enough savings to cover the cost of your initial transition? Will your current income cover the costs of your mortgage, a new rental property, divorce fees, living and household expenses?
At Latitude Financial, we believe Australian’s should be able to support themselves financially, whilst living a life done better. Like we said earlier, divorce isn’t the be-all-and-end-all, you CAN overcome the financial burdens with an anticipated approach to financing.
Whether you need a short term personal loan to help ease the stress of upfront legal fees and new living expenses, or a debt consolidation loan to move all your debts into one place with an easy to manage payment plan, our team of Betterers are on hand to help.
Give us a call on 13 28 26 or apply online.
1 Based on 48,000 divorces per annum. Source: McCrindle
2 Reilly, Kristen. The Economic Consequences of Divorce: The Role of Child Support, Labor Force Participation and Means Tested Transfers over Time. Cornell, 2009.