June Newsletter I Divorce Matters

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Can I Afford A Home After Divorce?

You’re headed for divorce and it’s clear that you won’t be keeping the marital home. Your family’s dual income has dwindled to a single income and you are looking for a new place to live. How do you know if you’re able to afford purchasing a new home?

The first thing you’ll want to look at is your new budget. Usually, it is best not to make such a big decision as buying a house without waiting for some time to really get adjusted to your new standard of living. If you are very well off, have acquired valuable assets in your divorce or have a substantial number of liquid assets, this can speed up your decision to buy – but you probably should not dive headfirst into a new home so soon after divorce.

You should also review all of your financial obligations. After divorce, you should have had all of your joint accounts split from your spouse and your name taken off of any other joint agreements, such as your old mortgage. However, some couples fail to do this. You should review your credit report to ensure that you have made a clean break from your ex-spouse, otherwise his or her actions could hurt your buying prospects. Reviewing your credit report is especially important if your ex-spouse was the family breadwinner, as it will give you an idea of whether you have enough credit history to purchase a house.

Your Insurance Policies After Divorce

If you are in the process of getting a divorce, one consideration you might not think of immediately is how it will affect your insurance policies. In many cases, you will need to have your name taken off of an insurance policy when the divorce is finalized – here’s a primer on some types of insurance you’ll need to change.

Filing for divorce starts an automatic, temporary injunction regarding financial matters and insurance. This means that neither spouse can modify an insurance policy, remove the spouse from the policy or stop paying premiums. However, after the divorce, spouses will likely need to have separate insurance policies, so plan ahead for these changes.

Health Insurance

If you are a dependent on your soon-to-be-ex spouse’s health insurance, you will no longer be able to be on it once the divorce is final. So, you should prepare – you can buy health insurance from the health insurance marketplace, or seek it through your place of employment if it is offered. Don’t let a divorce lead to a lapse in your health insurance history, or you may regret it come tax time next year.

Car Insurance

Are both of you named on an auto insurance policy? That’s no bueno. One of the problems here is that you are both going to have to speak to your insurance provider because they are not allowed to remove one person from a joint insurance policy without the consent of the other. Taking care of this prior to divorce will make it so that you and your ex can have a clean – or at least, cleaner – break than having to take care of it after a potentially contentious divorce proceeding.

Home Insurance

If you’re not living in the marital home, then you probably don’t want to be on the insurance. Whoever leaves the home should remove his or herself from the insurance policy. If you are the one leaving and you’re planning on finding a small apartment to live in until you get back on your feet, look into renter’s insurance. There are a lot of people in apartment complexes, and you want to ensure your belongings are protected from those little things like theft or fire. Basic renters insurance can be very reasonably priced.