How to Recover Financially After Divorce with Debt CounsellingApr 20, 2017
Divorce can be devastating for any family, emotionally and financially. Debt counselling and professional debt advice may be able to help Canadians reduce debt and minimize the damage to their finances during and after separation or divorce.
Financial disagreements can have an effect on marriage
Financial problems are a leading cause of divorce in Canada and the U.S., and tough economic times could put more pressure on these issues. An Experian survey found that 59 per cent of divorcees cited financial disagreements as a factor in their divorce, with 20 per cent saying financial conflict was a significant factor. Furthermore, 73 per cent of divorced individuals say they wouldn’t remarry without knowing their partner’s credit history beforehand.
Financial recovery after a divorce
If there are so many marital implications around money, why aren’t couples talking about their finances before and during their marriages? Some couples may be misinformed about their financial situation or blame the other spouse for their financial habits instead of working together to improve the situation. However, with professional debt help and financial literacy strategies, former couples may be able to minimize the impact of divorce on their finances. Here are some options:
- Educate yourself – If your marriage was spent dealing with financial problems and adding to debt, aim to improve your financial literacy. Visit the local library and find the financial literacy section or visit the Financial Consumer Agency of Canada (FCAC) for resources about how to rebuild your finances after separation and divorce.
- Use a budget – Learning to manage your own finances without your spouse is a new challenge. Make a budget that encompasses all your new expenses and your own income. Take into account any spousal support, alimony payments and debt repayment.
- Build credit – Now that your finances are separate, you should start looking into building your own credit, especially if many of your credit cards were held jointly during the marriage. Start slowly by finding a low interest credit card and only using it for purchases or bill payments that you can pay off in full.
- Explore debt counselling –Financial counselling through a credit counselling agency is one way to find help. A credit counsellor can advise you about how to rework your budget, offer financial literacy workshops or group sessions and create a debt management plan with your creditors that could lower the interest rates on your debts.
- Consider insolvency to reduce debt – If your debts are overwhelming and you’re struggling to meet your financial expectations, as outlined in your separation or divorce, insolvency may be your best option. A Licensed Insolvency Trustee can provide information about a consumer proposal as an alternative to bankruptcy, and explain all of your other debt relief options. An LIT can also give you information on bankruptcy and discuss the implications it may have on your divorce proceedings. It’s worth noting that an LIT is the only specialist who can file a consumer proposal or file for bankruptcy on your behalf.
Take time for self-care
Rebuilding finances and beginning to feel financially stable after divorce can take time. Connecting with others in the community who can offer support or insight into your situation can also help you rebuild emotionally. Going forward in your financial journey, you can regularly refer to the resources provided by the FCAC to reduce debt, stick to a budget and grow your retirement fund. This will help you feel confident in your financial decisions and your newly found independence.
Have you considered debt counselling or professional debt relief to help you before, during or after divorce? Learn more about the services provided by an LIT here. You can also join the online conversation by searching the Twitter hashtags #LetsTalkDebt #BDOdebtrelief