Separation or divorce: which expenses should you plan for?

When a couple separates, they will have to discuss certain expenses that they previously paid together. As a result, they must each make a new budget. If they have children, their expenses will be higher even if one parent will receive alimony payments. The advice shown in this list will allow you to plan your next steps and, most importantly, avoid falling into debt traps.

Expenses to consider following a separation or divorce

1. Housing costs

Regardless of whether you remain in your home or move, you’ll have to pay rent or mortgage payments, electricity and Internet bills, maintenance costs and home insurance by yourself.

Advice: Take the time to renegotiate your Internet and telephone packages and insurance policies, etc. Cut any surplus expenses such as paid TV channels and unnecessary mobile data.

2. Expenses related to children

In addition to purchasing clothing and paying for medical care, activities and a portion of childcare costs, you may have to pay alimony to your ex partner.

Advice: Even if you’re separated, make an effort to maintain effective communication with your ex partner in order to reach an arrangement as required. Indeed, you must agree on how to allocate your expenses.

Create a shared budget. This will allow you to avoid conflict and plan for unforeseen expenses.

3. Legal fees

The legal process (lawyer, mediator, notary) can end up costing thousands of dollars.

Advice: Opt for mediation. It’s the most cost-effective option. Regardless of whether you’re married or common-law spouses, the Ministère de la Justice du Québec provides a certain number of free hourly mediation sessions for families going through divorce or separation. The number of free sessions you can avail of depends on your situation. In any case, you can reduce your legal advice costs.

4. Joint debts

Debts that you incurred with your ex partner (mortgage loans, credit cards, personal loans, etc.) remain a shared responsibility.

Advice: make a list of all your joint debts and allocate them in a fair manner.

To find out more about managing joint credit cards and bank accounts during a separation, read our article on the topic.

5. Reorganizing your daily life

During a separation, you will certainly have to buy some furniture. Some people will have to add this expense to moving costs and the purchase of new appliances or a vehicle.

Advice: prioritize your essential purchases and consider buying used furniture.

6. Health, vehicle and home insurance

You must update your health, vehicle and home insurance coverage.

Advice: don’t forget to review your policies. This is an important step! Furthermore, take into account the cost of therapy or mental health services for your family if needed. Check whether your insurance provider will reimburse a portion of these costs.

7. Your tax situation

From a legal standpoint, your tax situation will change following a separation or divorce. This can impact both your income tax return and tax credits. The payment or receipt of alimony payments and shared custody of children can also make a difference.

Advice: seek the advice of a tax expert to maximize your deductions and credits following a separation.

8. Overindebtedness: take action quickly!

If you realize that you’ve accumulated debt and can’t get out of it, don’t wait to take action. Contact one of the Licensed Insolvency Trustees at Raymond Chabot! Don’t wait until you’re caught in a spiral of debt and have lost control of your finances. The sooner you take action, the better your chances of finding solutions.