5 Tips to Get Your PA Divorce Without a Mountain of Bills

One of the more common questions a client asks when consulting a divorce attorney is “how much will this cost?”  There is no easy answer to this question, as it depends on any number of factors- is the spouse in a fighting mood? Is their attorney not prone to encouraging settlement? Are there complex assets at stake that take time and money to understand?

A lengthy and protracted divorce can cost thousands, and even individuals receiving monetary support from the spouse they are divorcing can run up against mounting bills. If the parties establish separate residences, suddenly both are attempting to sustain a household with only their income, where once they had a partner. This all coincides with a monthly expense few people account for in their personal budgets- attorney’s fees.

These booming expenses may result in parties getting creative about their finances.  Some choose to try and cut down on living expenses, some charge it on a credit card and hope for a favorable payout at the end of the road, and some dip into their retirement just to get by.

Should I Use Retirement Funds?

The decision whether or not to take a early distribution on your retirement is one that comes with significant pros and cons. Such distributions usually come with a penalty, and are frequently seen as dissipation of marital funds. Most often clients’ retirement funds were earned during marriage, meaning that when you take a distribution during your divorce, that distribution will be added back into the marital estate as a credit. Not to mention the issue that this money was meant to be saved for retirement, not to supplement pre-retirement living expenses.

Here are a few tips to avoid getting your divorce without getting a mountain of bills along with it:

  1. Take stock of your monthly expenses and figure out exactly how you were getting by before: which spouse paid what bill? Where did that money come from? How much of your monthly income typically goes to bills and how much to entertainment? Once you have an idea of how you have been spending your money, remember that you’re now without the income you previously depended on from your spouse.
  2. Establish a separate bank account. This is the easiest way to avoid a fight over what portion of a prior account is marital and what isn’t- if your finances are completely segregated post separation, there is that much less to fight over come time for equitable distribution.
  3. Don’t rack up your expenses and assume that you’ll just pay it off after the settlement comes through- some clients accumulate credit card debt and loans only to find that their property settlement doesn’t give them everything they wanted. Maybe their pay out was in largely non-liquid assets, maybe their combined debt and legal expenses leaves them with a substantially smaller amount to walk away with from the divorce.
  4. Have an exit strategy for your divorce. You’ve filed, maybe you’ve moved out of the house. What do you want out of your marital estate? Some people are looking to “get as much as they can,” but often don’t actually have specific goals in mind.
  5. If you’re looking to retain the marital house, take stock into whether you can afford it when all is said and done: utilities, mortgage, real estate taxes all will be on you after the divorce decree comes in. If you’re simply looking to move on, think about how you can do that with what’s in the marital estate- should you be looking to receive mostly retirement? Are there any liquid assets in the estate that could help you start fresh?

Divorce can be a process of jarring transition. It is important to take stock of your financial status throughout your divorce and assess if you are doing everything you can to get through this, as well as whether you have a plan for what you want at the end of the divorce.