Dealing with Financial Problems Caused by Divorce

	Dealing with Financial Problems Caused by Divorce - Money Problems Radio Show (Opens in a new window. Optimized for Windows Media Player 6.4 and later versions.)
Originally aired on October 28, 2006.

Show Topic:

This year alone, 70,000 couples in Canada will end up separating or divorcing - an alarming statistic. In addition to the emotional pain of a marital break-up, there are real financial hardships that can ensue as well. On today's show we will talk about the financial challenges and worries that can affect you as a result of a marital break-up. We will discuss your alternatives when dealing with financial problems caused by a divorce or separation.

Guests:

Doug Hoyes joined us from the firm of Hoyes Michalos, & Associates Inc., Trustees in Bankruptcy. Doug and his partner Ted Michalos started their company in 1999, and in the past seven years have helped thousands of clients take control of their circumstances, prepare a plan and get a badly needed "fresh start". Doug is a chartered accountant and professional in personal bankruptcy.

Show Summary:

Doug said that 40% of the clients that they see filing a bankruptcy or consumer proposal have had some form of marital stress as a contributing factor in their situation. When you are married, in most cases you have 2 incomes one set of expenses, and "2 can live as cheaply as 1" so the old saying goes. When you separate, your income is individual but your expenses remain the same. Debt service can become difficult and many people have to borrow to survive and stay ahead. If there are children involved, the expenses associated with maintaining their needs can cause additional financial pressures.

Doug provided 3 recommendations to people who find themselves newly separated:

1. Open a new bank account right away;
2. Separate you debts: If you have two names on credit cards, bills or other obligations, separated or not - you are both responsible;
3. Cut your spending - you cannot live as you were before, and look at the ways to save.

In addition, be aware that if you have court ordered child or spousal support, you are responsible for making theses payments even if you go bankrupt. The government can and will use wage garnishees or take tax refunds to ensure court ordered obligations are met.

Question of the Week:

Q. My wife and I separated a year ago and I have been providing her with financial assistance for the kids but now she is planning on going bankrupt anyway. How will her bankruptcy affect me as we are not legally separated or divorced?

A. The biggest issue is with respect to joint debts. Even with her bankruptcy, if your name is on any joint debt, you are now 100% liable for the debt. Again, regardless of the bankruptcy, if you have court ordered support obligations you must honour them.

Don't let your money problems overwhelm you, contact a licensed trustee in bankruptcy or a credit counsellor for more information on debt management solutions available to you when dealing with your financial problems caused by divorce.