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Have you just separated or are you considering it? Your breakup could have an impact on your finances. To help you through this difficult time, we have 10 tips to help you protect your money and avoid incurring personal debt.
A separation can impact your finances. Here are 10 key steps to avoid debt problems:
Even if you and your ex are on good terms, you absolutely have to protect your money by closing your joint accounts. If you don’t, either one of you can continue to withdraw the funds, even if the separation agreement states that only one of you is responsible for debts or can access the funds in the account. Legally, the remaining funds in the account must be divided equally between you and your ex. If there are joint debts, they have to be paid fairly and equitably. However, you’re not responsible for your ex’s personal debts. Consult a lawyer or notary as necessary. If you did not have a chequing account before, open one in your name.
If your ex was previously allowed to use your credit card, cancel it or remove your ex’s name from the card. If you don’t, your ex may continue to spend money and force you to cover the purchases. Remember, an angry person can sometimes act irrationally.
Once all your joint accounts have been closed, go to your credit file and make sure the information is up to date.
After your separation, you will have to assume rent or mortgage payments and current bills on your own, in addition to any support for your children or former spouse. You need to review your monthly budget, calculate your expenses and set new goals. Our online budget calculation tool could help.
Your ex’s name was probably listed as the beneficiary on your life insurance policies, RRSPs or TFSAs, pension funds and so on. It’s time to update these documents, otherwise your ex will inherit your assets if you die. Most changes can be made over the phone. Also, review your will or mandate in the event of incapacity with your notary.
Notify the Canada Revenue Agency quickly about your separation or divorce. This change in status may entitle you to certain benefits such as tax deductions and credits. Among others, any allowances you pay to your ex are tax-deductible.
Don’t forget to notify your telephone, Internet, electricity and gas service providers of your change of status.
Any separation requires coming to terms with how life used to be. With only one salary, you’ll no longer be able to have the same lifestyle. You’ll have to make choices. Once you have prepared a budget, see where you can cut. Outings, eating out and travel are often the first things to do without for a while.
With divorce, many people find themselves having to buy a new car and looking for a home big enough to accommodate the children in joint custody. This can trigger a lot of expenses. If you are in this situation, wait until things settle down before making big financial decisions like buying a condo. That way, your payments will be lower and your credit rating will be protected.
If you’re moving and need to replace your furniture or appliances, go for used rather than new. There are great bargains on second-hand websites. Also, ask your friends and family if they can give you any items they no longer need.
In any event, be patient! Going through a divorce or separation is never easy, but by being careful, you should be able to get back on track quickly. If you need help and you can’t seem to get out of your financial troubles, don’t hesitate to make an appointment with one of our professionals. They are available to help you, confidentially and without judgment. The first consultation is free.
Are your debt problems a burden? Don’t hesitate to contact one of our licensed insolvency trustees who can guide you each step of the way.
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