4 Tips for Avoiding Financial Ruin After a Divorce

Ending a relationship can be a traumatic and emotional experience. If you and your spouse are contemplating a divorce, it is wise to face the inevitable financial realities that can result. Here are a few recommendations to help you avoid the common monetary pitfalls of separation that can harm you financially for many years.

1. Sell the House

A jointly-owned home is a source of financial devastation and tension for many couples contemplating divorce. You should never walk away from a property with your name on the mortgage. You could face foreclosure if your spouse keeps the home but does not pay the mortgage. A divorcing couple can transfer ownership of the property to the one wanting to retain it. Use this time of change to take control of your life.

2. Divide the Debts

One of the biggest issues during separation is how to distribute and protect assets after divorcing. In most states, marital debt and property are divided between spouses equitably. However, you and your spouse can also agree upon responsibility for the bills with the help of a mediator who can help couples negotiate. Otherwise, the court will decide for you. Just be aware that even if your spouse is ordered to pay a particular joint debt, creditors and debt collectors are not bound by the decision of the court. They will attempt to collect from you if your name remains on the account. Paying off all the bills before the divorce is final is the best practice. It that is not feasible, then try to transfer joint debts into individual accounts.

3. Establish New Accounts

You should open separate bank and credit card accounts before any defaults resulting from the separation impact your credit. If you have agreed upon dividing credit card obligations, transfer your portion into the new account. Then make a clean break and consider closing all joint accounts. Your spouse could potentially run up debts on the joint accounts and then refuse to pay, dragging you into financial ruin. Preparation before the marriage ends can alleviate some of your financial burden during and afterward.

4. Monitor Your Credit History

All consumers should monitor their credit reports annually, particularly those facing divorce. TransUnion, Experian, and Equifax are the three credit reporting agencies that allow you to view your credit report. Federal law allows you to obtain your credit report for free once every 12 months from each bureau. Make sure to stagger your requests and monitor and analyze the reports carefully, looking for any new or unusual activity. If your former spouse has your social security number, you may be responsible for accounts opened without your knowledge. Keep on top of this until you are confident your credit report is stable and any shared finances are permanently separated.


Take a step back from the emotions surrounding your divorce to look at your financial situation closely. Separation is difficult, but making the best possible financial decisions now may relieve you from the burden of your ex-spouse’s financial mistak

About Oliver Ross

Oliver Ross, JD*, PhD founded Out-of-Court Solutions Inc. in 1995 and since then has mediated over 3,000 divorce and family matters. He is a select member of the Maricopa Superior Court Family Mediation roster