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7 Important Ways to Financially Prepare for Your Texas Divorce

7 Important Ways to Financially Prepare for Your Texas Divorce

I am often asked by clients and potential clients about things that can be done to get financially prepared for a Texas divorce. I have written various articles on this topic before and I will put links to those articles at the bottom of this one. One of my recommendations to those facing divorce is to start trying to separate finances.

It is not uncommon for a divorce to throw those involved into financial turmoil. If a divorce participant is not careful they may be blindsided with bills they are unable to pay, bank accounts that have been emptied, or credit cards that have been maxed out by their spouse.

Taking a small amount of time ahead of time can allow you the breathing room you need to make important decisions during the divorce and not make a bad decision because you are struggling financially.

1. Establish a Separate Bank Account

Establishing a separate bank account is a fundamental step towards financial independence and security during a divorce. This move is vital for ensuring access to funds for basic needs and emergencies, without the risk of interference from your spouse.

It’s advisable to select a reputable bank, open an account in your name, and start channeling a portion of your income or savings into this account. Setting up direct deposits for your salary to this new account can also be a practical step. Over time, this account will become a cornerstone for your financial foundation post-divorce, aiding in a smoother transition to financial independence.

2. Detach from Joint Credit Cards and Loans

Protecting your credit score and limiting your financial liabilities requires the removal of your spouse as an authorized user on joint credit cards and loans. Neglecting this step can lead to significant debt accumulation by your spouse, adversely affecting your financial standing and credit rating.

Contact your creditors to revoke your spouse’s authorization and closely monitor your statements for any unauthorized transactions. For joint debts like mortgages that cannot be easily separated, it’s essential to develop a strategy for managing or resolving these debts, potentially with the help of a financial advisor.

3. Obtain Your Credit Report

Acquiring a personal credit report is crucial for uncovering any undisclosed debts or financial missteps made by your spouse under your name. Utilizing free online services to obtain your report from major credit bureaus is a proactive way to detect any discrepancies or fraudulent activities early in the divorce process. Regular review of your credit report allows you to address issues promptly, safeguarding your credit status.

4. Separate Insurance Policies

7 Important Ways to Financially Prepare for Your Texas Divorce

Ensuring continuous coverage of health, auto, home, and life insurance during and after the divorce is imperative. Filing for a Temporary Restraining Order at the beginning of the divorce proceedings can prevent your spouse from canceling existing insurance policies.

Additionally, researching and securing individual insurance policies is crucial, especially in cases where there’s a risk of your spouse disregarding court orders. Post-divorce, it’s also important to reassess the beneficiary of your life insurance policies and make necessary updates.

5. Strategize Bill Management

Effectively managing household bills plays a critical and often overlooked role in the divorce process. You should assess which bills need transferring to your name and consider opening new accounts for services such as cell phones or utilities.

Developing a clear payment plan, possibly including setting up automatic payments or creating a budget, ensures timely payments. In some cases, negotiating with service providers for better rates or payment plans can be beneficial, especially when transitioning to a single-income household.

6. Plan Major Purchases Wisely

When you consider a divorce, planning major purchases with foresight becomes crucial. Ideally, make significant acquisitions, such as buying a vehicle or expensive appliances, before you initiate divorce proceedings. This precaution is necessary because many jurisdictions automatically impose standing orders or temporary restraining orders once you file for divorce. The intention behind this measure is to prevent either party from unilaterally depleting marital assets.

7. Invest in Education and Job Training

For individuals anticipating a divorce, especially those who have been financially dependent on their spouse, investing in education and job training is a strategic move towards long-term financial self-reliance. This investment is not only about immediate employment opportunities; it’s about building a sustainable career path that can provide stability and growth in the years following a divorce.

7 Important Ways to Financially Prepare for Your Texas Divorce

Consider exploring educational programs, vocational training, or certifications that can enhance your employability and earning potential. This may involve returning to college, attending workshops, or engaging in online courses that align with emerging job markets. The key is to identify fields that not only interest you but also offer viable career opportunities.

Final Thoughts

In conclusion, preparing financially for a divorce in Texas involves thoughtful planning and strategic decision-making. From establishing a separate bank account to wisely planning major purchases and investing in your own education and job training, each step is crucial in safeguarding your financial future. These measures not only protect your assets and credit during the divorce process but also lay the groundwork for a stable and independent post-divorce life.

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