Approaching Big Financial Decisions During Divorce
If you and your spouse have decided to divorce, you might feel eager to begin moving forward and start your new life. However, caution is recommended when making big decisions, especially those involving finances. Here are a few reasons to consider postponing major financial changes until after the divorce is finalized.
Making Big Purchases Might Impact Your Eligibility for Refinancing the Mortgage
The property division process often requires couples to purchase new vehicles to replace the ones they previously shared. However, before you buy a new car, consider whether you will need to refinance your mortgage after the divorce.
For example, perhaps you and your spouse are both on the mortgage now, but you plan to keep the family home. You might refinance the mortgage to seek a better rate and account for your new sole ownership. Purchasing a vehicle immediately before applying for a mortgage can significantly impact your eligibility and rates.
Your lender determines your loan eligibility based on your current assets and income. If either of these changes, they may need to reconsider the loan, adding time to the refinancing process and potentially leaving you with worse interest rates.
Selling Assets Could Lead to Disputes During Property Division
Pennsylvania follows an equitable distribution policy for divorce, which means the court seeks to divide assets fairly between spouses. Selling assets or making major investments immediately before the divorce could lead to disputes during the property division process.
A judge may assume you were trying to devalue the estate or hide assets. It may be better to delay big financial decisions until after the divorce, when the property division is finalized.
The Court Could Impute Income for Alimony or Child Support
When a spouse is “underemployed” in a divorce, meaning they work below their skill level and potential earnings, the court may impute income. This means the court would base spousal support and child support on their earning potential rather than actual earnings.
If you are currently underemployed, consider exploring other employment opportunities to increase your income. Otherwise, the court may base support obligations on imputed income, which could lead to higher payments than you can reasonably afford.
Your Financial Habits Could Affect Child Custody Choices
Showing that you are financially responsible is important when navigating the child custody process. Remember, your financial decisions leading up to the divorce can affect your reputation in the eyes of the court.
The judge may scrutinize your transactions to look for signs that you are financially unstable or irresponsible. Even if you can justify the major purchases you made, a judge may not view them the same way you do.
Consult With Karen Ann Ulmer, P.C., Before You Make Big Divorce Decisions
Seeking counsel from an experienced divorce attorney can help you determine which financial decisions and transactions might impact your divorce process. Karen Ann Ulmer, P.C., advises clients throughout the asset protection process, divorce mediation, and child custody negotiations. Schedule a confidential phone consultation with our divorce attorneys by calling (866) 349-4117.
