How Mediation Can Help You Avoid 7 Big Financial Divorce Mistakes

Eric Sandberg wrote, “Seven Big Post-Divorce Money Mistakes” for Fox Business.  The following are the ways mediation can help you avoid those mistakes.

1.  If your mortgage or credit card is in both parties’ names, then your lender will sue both of you if it’s not paid.  Your Agreement should address which of you will be liable for the debt, but that is only a contract between the two of you.  Your lender doesn’t care about your agreement, they care about their contract with you jointly.  Your mediator should clearly and fully explain this to you, but one of the benefits of mediation is that when you voluntarily put together your Agreement, you tend to stand by the decisions you’ve made so there is less of a chance of one party having to sue the other in order to get reimbursed for a lender’s debt.

2.  You may not be able to afford continuing to live the same lifestyle you enjoyed during your marriage.  Part of NHDM’s mediation process is to work through budgets with the parties.  When one household and the couples’ resources get divided in half, each party will realistically work on his or her budget to project how much of a surplus they each have to spend each month.  When their resources won’t stretch far enough and either party can’t afford the decisions they’ve made, those decisions will have to be re-evaluated.  This way no one is moving forward blindly.

3.  If both parties names remain on the mortgage and the party remaining in the marital residence who has taken responsibility for making the mortgage payments doesn’t make the payments, the alternate party’s credit will also be damaged.  During the mediation process, any and all such risks are fully disclosed and options outlined so that each individual is able to make knowing decisions and have a plan of action outlined in their Agreement so that each will have control over their futures.

4.  Don’t run up the credit card in order to take revenge on the other party.  You may also be held responsible so your revenge would backfire.  During the mediation process, all debt statements are inventoried and reviewed and the debts equitably allocated.

5.  Don’t get expensive plastic surgery to satisfy the hurt from your spouse running to someone younger.  You will just end up with more debt and it is doubtful that your new look will do anything to affect your soon to be ex-spouse.  According to the article cited above, you should “[d]elay any major decisions — financial and cosmetic — for at least six months to a year after a divorce is finalized.”   I would suggest a year at least.  As sane and clear as you think you are during that first year, I have never met a divorced individual who can’t look back and see that he or she wasn’t really themselves during that first year.  When you work together through the mediation process you begin to learn how to navigate your new relationship as un-married individuals.  You are working together to make your decisions rather than having them thrust upon you.

6.  Don’t compete for your child’s love through financial purchases.  Even if it may not feel that way at the time, your child will appreciate that you have parented by giving of your time in a positive way.  Don’t speak ill of the other parent to your child.  The best gift you can give to your children at the time of divorce is to mediate your issues, divorce amicably and not put them in the middle by throwing money at them or otherwise competing for their love, or putting them in the middle of your adult battle.  Better yet, make it a life transition rather than a battle.

7.  It is certainly best not to fall right into another relationship and certainly don’t give or loan any money to the new person in your life.  “Avoid lending or giving money to anyone for at least a year after divorce.

Almost everyone has regrets about a broken relationship. Don’t make needless, emotion-based liabilities one of them. Divorce your mate, not common sense.”

When you mediate you work together to make the best practical decisions for both of you.  You will make decisions based on the facts rather than the hurt and anger that’s fueled in a court battle.  Mediation is a great way to avoid many of the most common, big financial mistakes couples often make during and after divorce.