Divorce can be emotionally difficult and if you are not cautious, it can hurt your economic future. If you are going through a divorce, you should make every effort to avoid the following five common financial mistakes that can cost you a lot of money and leave you in a bad financial situation in the future.

1. Becoming House Poor. Often times, the family house gets kept by one spouse after the divorce. Whether you would like to keep the house because of your children or because you are simply attached to it or have invested money into it over the years, you should make sure you can comfortably afford to keep possession of your home. You may find that paying the mortgage and maintaining the house on your own will make you house poor and unable to afford the lifestyle you would like. 

2.  Thinking Short Term. It is common for divorcing couples to focus their attention on short-term problems and benefits rather than thinking long term. By thinking about how every financial decision you make in your divorce will affect you in 5, 10, 15, and 20 years, you can reduce your risk of making a mistake. 

It is often a good idea to refinance your home before rather than after divorce proceedings. This is particularly true if you own a home that is jointly held by you and your soon-to-be-ex-spouse. In the event your home is jointly held, you will be able to sell the property or have one person’s name removed from the deed. If you choose to remove a name from the deed, you should consider refinancing before divorce proceedings for the following reasons:

1. Your Credit Score May Drop. During a divorce, spouses will typically undergo many financial changes. If you share accounts with your spouse, your credit rating may go down when these accounts are closed. In addition, legal fees during your divorce proceedings can hurt your finances and credit as well. Therefore, it is a smart move to refinance your mortgage before your credit score takes a hit, so that you will not be left with a higher interest rate and higher monthly payments. 

2. It Can Be Difficult to Refinance After a Divorce. All too often, couples do not remove one spouse’s name from their mortgage until their divorce has been finalized. The spouse keeping the home will be seeking a new loan, but they may not be able to land one that is suitable for their needs. If this occurs, a spouse may be unable to take over the mortgage, because a lender may refrain from approving a single borrower with a credit score and income that is lower than what was displayed on the combined application. Refinancing complications will then arise, and the spouse who will no longer be living in the house may still be required to contribute to mortgage payments.

3. Plans Can Change During Divorce. While you may have originally hoped to divide your assets in a civil manner, the strong emotions that can arise during divorce proceedings can cause opinions to change. For this reason, it is better to make financial decisions, especially large ones that are related to your home, before matters between you and your spouse get emotional.

4. Asset Protection. Asset protection should always be on your mind when you are going through a divorce. You should be thinking about your current life as well as the future to avoid bad scenarios. For example, if the name of your ex-spouse is listed on your mortgage and title, and they get in trouble with the IRS down the road, your home could be at risk. By refinancing right away to secure sole ownership, you can avoid these types of issues and protect your assets.

Contact Our Delafield Divorce Lawyers

If you would like more information about how to manage financial matters before, during, and after your divorce, the family law attorneys of Bucher Law Group, LLC can help you understand your rights and make plans that will ensure your financial security. Contact our Milwaukee County divorce lawyers today at 262-203-4916 to schedule a free consultation. 

Whether a couple has been married for a year or 20 years, they are bound to experience some challenges. Often times, these challenges hurt a couple’s relationship rather than strengthen it, resulting in divorce. Let us take a look at the top 6 reasons marriages end in divorce.

1. Lack of Communication. A relationship cannot be successful without open lines of communication. When spouses fail to share their positive and negative feelings with one another and keep things to themselves, problems are likely to arise. 

Since marital problems cannot be solved when there is no willingness to communicate, negative feelings may build up over time--leaving problems unresolved and therefore causing frustration and resentment. This frustration and resentment eventually leads to a divorce.