Handling finances during divorce

When couples marry, they tend to start thinking as a single unit – creating joint bank accounts, buying a home together and sharing debt.  So when spouses decide to divorce, they face the task of untangling their shared finances, and it can be easy to make mistakes in the process.

If you’re going through a divorce, the thought of sorting-out bills with your soon-to-be ex may seem less than appealing. But taking no action at all could cause credit problems down the road.

Bank accounts and credit cards

Even when couples split on good terms, there’s always a risk that one spouse may run up credit card debt, or drain a shared bank account. So if you and your spouse have decided to divorce, the first thing you should do is close shared bank accounts and cancel shared credit cards.

Order copies of your credit reports to ensure you don’t miss any outstanding accounts or loans during this process. If you had scheduled any bills to be automatically deducted from your shared bank account, you’ll need to decide who will handle those obligations now and share your new bank account information with those creditors.

Division of property

Your duty to pay off your mortgage doesn’t end with your relationship. And adjusting to a new way of living – with only one source of income – means that even if one spouse agrees to give up interest in the house, the other may not be able to afford to stay there. However, if one partner makes enough money to keep the house, refinancing the mortgage and buying out the other partner’s interest is a viable option.

Selling the house may be the best option for divorcing couples, although a sluggish housing market may make that difficult to do. Your home may be worth less than the balance remaining on your mortgage, which means that even if the home sells, you may not make enough off the sale to pay off your mortgage. Talk to your lender to discuss your options.


In many marriages, one partner may have better health insurance options than the other, and both partners may be insured under one spouse’s policy. If you would lose your health insurance because of divorce, you may be eligible to extend your coverage through COBRA Continuation Health Coverage for up to 36 months.

If you haven’t been the partner who handles bill payment, make sure you get the details about other shared insurance policies; a single missed payment could cause you to lose coverage. And gaps in car insurance could cause insurers to see you as a higher-risk client.

The best advice for divorcing couples is to call your insurance agent. You may need to change your coverage, depending on what deductible you can afford. And if you have teen drivers, you and your spouse will have to decide whose policy covers them.

Starting over

Divorce may include a number of difficult and stressful tasks, like creating custody agreements, divvying up belongings and determining what to do about your house. But often, the biggest challenge is learning how to live alone again and how to manage your expenses with one income. Years from now, you don’t want to find a black mark on your credit report, simply because you and your ex neglected to repay an obligation. Sort out financial issues now, so you can start over with a clean slate.


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