The overall divorce rate is declining , but in the United States, it still remains a top cause of bankruptcy proceedings. Sometimes debt adds fuel to an already turbulent marriage, moving it closer to divorce. Other times, the divorce itself causes financial strain, as both individuals need to adjust to supporting their own household, when previously they shared all the expenses.

But regardless of the circumstances, if you are going through a divorce, there are steps you can take to reduce risk and mitigate financial exposure.

Here are a few tips for getting started:

If the divorce is amicable, work out debt issues before filing for divorce. Under the best of circumstances, it’s ideal to start “untangling” before filing for divorce. Does your spouse have credit card debt? If so, ask him or her to request a balance transfer onto an account in their name only. This goes for other debts as well.

Take inventory of all debt that belongs to your spouse. In some cases, your spouse may have debt that you aren’t aware of. Pull a credit report and inventory all debt.

Close all shared accounts. Once you start the divorce proceedings, it’s important that all shared accounts be closed. For example, did the court order your spouse to pay for his or her auto loan, yet, it’s still got your name on the loan? Ask your spouse to refinance the loan into their name only.

Monitor your credit report. If you have joint financial obligations and your ex-spouse stops making payments on the account, it can be reported on both of your credit reports. Ideally, you’ll close all joint accounts, but if any still exist — such as a mortgage — keep close watch on the payment activity.

Understand your ex-spouse’s plans for bankruptcy. If your spouse is planning to file bankruptcy after the divorce — and you don’t — debtors on any joint accounts may come directly after you for the full balance. Stay in communication with your ex-spouse if possible, and ask to be notified of any plans that would affect you financially.

Adapting to the financial changes that come with divorce is difficult, and there are situations where bankruptcy does make sense. If you are faced with divorce and are interested in exploring bankruptcy options, please contact us — the law firm of Penachio Malara LLP can help. Call 914-946-2889 today for a free consultation.

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