Tuesday, September 20, 2011
Even before the current prolonged economic downturn, many divorces ended up focusing on how to manage the community debt. Some married couples are fortunate and keep debt to a minimum, but a more common scenario is that the marital debt is a significant issue to be addressed either in court or in settlement.
If you are using the Collaborative Law process to resolve a divorce, you will probably work with a neutral divorce financial planner. In litigated divorces, we sometimes bring in a financial planner to work with one side in the case, and sometimes each party hires their own advisor. Working with an expert like that is invaluable in analyzing tax consequences and preparing financial strategies for negotiations or for court.
With or without a financial advisor, here are some suggestions to consider in dealing with debt issues in a divorce.
1. Be realistic. Have an outsider, like a certified divorce financial planner, review your situation and make suggestions. Don't over-commit or be over-optimistic. Your lifestyle will probably be lower post-divorce and it may take a while to get back on your feet. If you're in a hole, plan to take some time to work your way out. Don't try to do it overnight.
2. Go solo and end joint accounts, if possible. Don't pay off and close your individual credit accounts. Make payments, but keep them open. On the other hand, try to close out any joint accounts so that you will not be affected by your ex-spouse's future payment history, or lack thereof. You need to separate your finances, just like you do the other parts of your life.
3. Don't rely on your spouse. It may take you a while to transition to full separation and independence, but you should continuously work for that. Your spouse may have good intentions, but things like a job loss, health problems or a new relationship, among other things, can come along, and suddenly financial performance doesn't match their pre-divorce words. As soon as possible, you need to be independent. Get an expert, if necessary, to help you come up with your own plan.
4. Close out joint bank accounts. For a while, they might be a way for the spouses to show their trust and commitment to each other, but that changes over time. You both need to be independent. There are plenty of ways with electronic banking to make quick payments and transfers, so you don't need joint accounts. Having separate accounts also improves your security and eliminates any temptation to get financial revenge of the spouse.
5. Refinance you mortgage, if you qualify. You can save money, build separate credit and help your ex-spouse rest easier at night. It also gives you more financial privacy.
6. First, pay off the smaller credit cards in your name. You should also continue making payments on all your cards, but concentrate on the smaller ones and knock them off as soon as you can by making extra payments. Generally, it's usually better to keep the cards open after they are paid off.
7. As a last resort, you can consider filing for bankruptcy. For that decision, you should consult with a bankruptcy specialist. Most family law attorneys in North Texas don't handle bankruptcies. Just like you should hire a family law specialist for a divorce, you should look for a bankruptcy specialist to help you evaluate your circumstances. There are serious consequences to filing for bankruptcy, so consider carefully as a last resort.
Divorce can be devastating on finances, but it doesn't have to be. Careful planning, taking a conservative path and getting expert assistance will help you make the right decisions on debts and other financial issues.
For some additional ideas, see an excellent article called, "Know How to Get Debt Free after Divorce" by Amy Lewis in Ben Stevens' South Carolina Family Law Blog (always a good source) from August 8, 2011.
Wednesday, September 7, 2011
Children are born out of wedlock under a variety of circumstances. Sometimes there's a long-term relationship, sometimes a one-night stand. Sometimes the father is involved all the way and sometimes the father isn't informed until months or years after the child's birth. Some fathers choose not to be involved and try to avoid responsibility. Other fathers try to be as involved as the mother will permit. Some unmarried parents work very well together, some don't get along at all, and others can set up a plan and follow it, even when the parents don't really like each other.
Obviously, there are many different circumstances when a child is brought into the world with parents who aren't married. One factor that almost always appears is a court order to officially establish who the father is and then set child support and terms of access to the child. It will also allocate the rights of parents between the two parents. All together, that amounts to a custody determination.
In most cases where a child is born out of wedlock, the child ends up with the mom who has most of the significant parental rights and has the child the majority of the time. The father usually is ordered to pay child support and has visitation rights. In the future, child support and visitation often become repetitive sources of conflict between the parents.
In a few cases, the father of the baby decides to try to win custody of the child. For the fathers who are considering such actions, here are some issues to consider.
1. Do you really want the responsibility that goes with having primary custody? Or do you just want a lot of time with the child? Do you want decision-making powers, or want to share them, or does that matter to you? What are your underlying goals or needs? These are questions you should answer and discuss with your attorney.
2. Are you prepared to take primary care of a child? Do you have the knowledge and experience to be able to deal with your child's needs in an age-appropriate manner? You can certainly learn, but there are a lot of things you will need to do that you may not intuitively know.
3. How do you compare to the other parent on parenting issues? Everyone has strengths and weaknesses. A judge will be evaluating both parents to determine who has the best skills, experience and attitude for taking care of a child. If possible, you should be able to demonstrate your competence as a parent.
4. If you haven't been the primary caregiver, why should the court switch to you? That's really a key question. Even if this may be the first official custody determination for your child, there is a natural tendency to view it as an issue of whether custody should be modified or changed, if one parent has had significant time where she has been the primary or only parent involved. You need to have some powerful reasons why the court should upset the living arrangements. It's not always best to leave a child where he/she has been, but it is common for a judge to start with a preference to not change a stable arrangement.
5. Ultimately, what is in the child's best interest? That is, absolutely, the bottom-line issue. You need to be able to articulate what the child's best interest is and why you are in the best position to help meet your child's actual needs.
If you are considering fighting for custody for a child born out of wedlock, you should think carefully before you start the fight. Try to figure out what your real underlying interests are. Don't get stuck just thinking about possible solutions. What are your strengths and weaknesses? Are you prepared for a tough, expensive and emotional fight? Think and analyze before you act. Get counsel from wise family members and friends, but lean heavily on the advice of an experienced family law attorney who has seen and been involved in such cases in the past.
Remember to look before you leap!