Protect yourself financially during a divorce

Not only can divorce be emotionally devastating, it can also wreck you financially. If it is a looming possibility, consider taking the following steps:

Close joint accounts immediately

A joint account means you’re on the hook for any spending spree your spouse may go on, or worse, you may find the bank account completely emptied overnight. If you live in a communal-property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), you may have additional protection as these states consider any assets acquired during your marriage to be owned equally by both husband and wife. They are split 50-50 in a divorce.

Remove one another as authorized users on credit cards, bank accounts, etc.

This goes hand-in-hand with closing joint accounts.

Understand bankruptcy rules

If your soon-to-be ex wants to file for bankruptcy, you don’t have to participate (remember, it ruins your credit for 7 years). Make sure you have a clear understanding of what property/possessions comprise the bankruptcy estate.

Refinance your home immediately

The person keeping the home should refinance in their own name. This way, the spouse who doesn’t own the house isn’t on the hook if the mortgage doesn’t get paid. If you’re keeping the home, make sure you can afford all the costs associated with it. It may end up being smarter to sell the house during divorce proceedings and split the proceeds. The same thing applies to car loans and any other loans you have jointly.

Pay off all shared debt

Lenders don’t care that you’re suddenly single — they won’t let you off the hook for outstanding debt — even if your spouse says so. If possible, pay off all shared debt before the divorce is final.

Consult a lawyer

Divorce lawyers are more likely to know hidden rules or laws that can benefit one spouse vs. the other. Hire a professional to ensure all aspects of the divorce have been considered.

Regardless of your final settlement, make sure that you’ve got a clear handle on your new financial situation — allowing you to budget accordingly and move on.