Getting a divorce is not just emotionally draining; it can also significantly strain your finances. According to research by the Center for Economic Studies, divorce is one of the leading causes of bankruptcy, next to job loss and medical bills.
Ending your marriage may overwhelm you with debt and more financial stressors than before. If this happens, filing for bankruptcy may be a good way to start over. Here are some of the top reasons why breaking up with your spouse can lead you to bankruptcy.
Legal expenses
Unless you have an amicable divorce after a short marriage with little assets, chances are, you will spend a hefty amount on legal fees. Legal costs can skyrocket if you get stuck in contentious battles over custody, property division or support payments. The more you fight during your divorce, the more you will spend.
The single life
Two can easily live as cheaply as one. Marriage means you have the opportunity to share costs and have two incomes. But divorce may cause your income to decrease and your expenses to increase. It can be difficult to resize your lifestyle according to your shrinking budget.
Shared debt
You do not simply divide property and money in a divorce, but also debt. You may get stuck with paying off debt for a long period of time. If you fail to separate joint accounts, you may be liable for debt your ex incurs.
Support payments
If you are the higher-earning spouse, the court may order you to make child support and/or alimony payments. But just because you earn more does not necessarily mean you can easily afford support payments. Making monthly payments while dealing with the other financial consequences of your divorce can send you into a mountain of debt.
There is no shame in declaring bankruptcy before, during or after your divorce. It is a common occurrence and may be the only thing to help you recoup your finances.
