In Australia today around
1 in 3 marriages can be expected to end in divorce. With 77% of
Australian couples also living together before getting married (and
let's face it – some don't go the distance) the real
impact of relationship breakdowns is likely to be much higher than
the statistics lead us to believe.
There is no doubt moving on from any long term relationship, be
it marriage or de facto, can attract a heavy emotional toll. But
the financial impact can also be far reaching and long lasting.
Finances are often left on the back burner as you focus on the
emotional health of yourself and your family. Perhaps it is the fi
rst time you have had sole responsibility for your finances? Or
maybe you feel overwhelmed and don't know where to start?
The key is to take action early. Here are some steps to get
back on track financially after a separation or divorce...
Check your credit rating
A vital first step is taking control of your financial future!
Check to see if your credit report contains any errors or if any of
your partner's information is listed. If so, have it rectified.
There are two main credit reporting agencies – Veda and Dun
Identify your creditors
Make a list of all your creditors, both secured and unsecured.
Your secured creditors are those where assets are used as security
for the loan, eg house or car. Negotiation of both the assets and
the outstanding loans will be required by both parties.
Separate all joint accounts
A time consuming but crucial step is to unravel all your joint
accounts, including credit cards. Even if the separation is
amicable it is best to separate all accounts to avoid future
Create a budget
An unavoidable result of separation is a change in lifestyle. An
important step in making this adjustment is creating a
comprehensive budget separating discretionary and mandatory
expenses. To stick to your new budget you may need to make tough
decisions on discretionary spending. Of course, if you have
children then child support may also come into the equation –
one party may be paying child support while the other receives it.
Remember that child support payments will cease or may be amended
at some point in time. This should be factored into future planning
for both parties.
Decide on your housing options
In most cases the family home is either sold or refinanced. At
least one partner will need to find somewhere new to live. While
renting may be a viable short term option, in the long term most
people wish to buy a home. You will need expert advice on how to
best refinance your home or secure a loan for a new home. If
refinancing or applying for a new loan it is important that all
required identity documentation reflects your new marital status
and/or any change of name.
It is essential you contact your mortgage broker to discuss the
process BEFORE lodging any loan application documents.
Prepare a Financial plan for the future
Start an emergency fund – open a separate savings account
for unexpected emergencies.
your Will – ensure it reflects the changes that have
occurred in your life.
Manage your debt – contact us for a chat about how to
reduce your 'bad' debt like credit cards and personal loans
as quickly as possible.
Plan for your retirement – review superannuation and
update beneficiary details if required.
Review your insurance needs – you will need to update
policies from married to single status.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Sect.117 can deal with false statements and knowingly making false allegations of violence could justify a costs order.
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