Dealing with Financial Difficulty after a Separation or Divorce
As of 2008, approximately 40 percent of marriages ended in divorce and the average length of marriages was less than 14 years. Divorcing couples are on average in their early to mid-40s, which is considered close to “prime earning years.” At this time, families often have significant assets and young children, both of which can influence financial decisions in divorce.
The Costs Of Getting Separated Or Divorced
Five years ago, uncontested divorces averaged under $1,400 in expenses, while contested divorces averaged over $12,500. When a couple divorces, there may be numerous fights over dividing the assets, debts, legal fees, and who will pay which bills, not to mention the costs of taking care of two households and childcare with the same income that was once used for a single household.
Canadian divorce laws are governed by the Federal Divorce Act, but dividing assets is governed by each individual province. The court system strives to equally split assets that a couple earned collectively over the course of their marriage, however financial difficulties may still result for one or both parties during the process. This is where D. & A. MacLeod Company Ltd. can assist. Rather than suffering in debt after a divorce or separation, turn to us for debt consolidation and credit counselling services in the Ottawa area. We will meet with you to discuss your current situation and assist in developing on a solution that works for you over the long term.
Potential Problems Couples Face When Dividing Assets
Dividing the assets previously built during the marriage is often difficult, especially if one person has earned more than the other and you have young children that you would like to see continue living in the matrimonial home. As of December 1, 2015 a new exemption of $10,000.00 for equity in your home was enacted. This should, in many cases, assist individuals who may wish to try and maintain the matrimonial home. Disputes about who will keep the home are also common. Fighting over the notional tax amounts of registered retirement savings plans and other registered plans (such a private pension plan) may also occur since you are estimating today what a future tax liability will be. Further complications will arise if assets were accumulated by either party before the marriage, which will need to be subtracted before the remaining net assets are divided.
Problems can surmount if one or both parties are financially strapped. If one of you wish to file for bankruptcy, permission from your partner is not required, though you may be in a better position to assess the problem once the issues of marital property and spousal/child support are dealt with first. Keep in mind that creditors may reach out to your partner either way, since debts cannot be truly split in a divorce and the second party may ultimately file for bankruptcy too. While assets like your home, pensions and RRSPs are usually protected and legal fees resulting from divorce can be discharged, unsecured belongings such as a boat, camper or snowmobile can be repossessed.
Disputes Over Spousal And Child Support
Usually one spouse earns less income than the other during the course of a marriage. Because of this, a separation or divorce will often result in spousal and child support for a period of time, depending on the length of the marriage, your incomes and ages, and the ages of your children. Both parents have a duty to support their children and child support is mandatory by law if the parents have a differential in income. If one party files for a bankruptcy or a consumer proposal in Ottawa, then certain debts that are owed, such as spousal and child support, cannot be discharged as a result of the filing.
Accumulating Legal Fees
When deciding to file for divorce, it is important to consider the costs that will be associated with this decision, including legal fees, support payments, and many others. If you need assistance dealing with the aftermath of these expenses, it will be in your best interest to seek financial assistance from a Licensed Insolvency Trustee (LIT) in Ottawa, which may include filing for bankruptcy, debt consolidation, or simply asking assistance on how to manage your expenses. If you and your spouse can work together amicably, you may be able to avoid tremendous expenses that could significantly affect your future financial health. Financial ruin as a result of marriage breakdown happens all too easily and will negatively impact the children who may be better served by those funds instead.
Seeking Financial Assistance & Debt Consolidation in Ottawa and Eastern Ontario
Most couples experience at least temporary stress while undergoing divorce, some of which is caused by the emotional strain of the breakup, the change in their finances, the management of shared debts, and a division of assets. A Licensed Insolvency Trustee (LIT) at D. & A. MacLeod Company Ltd. offers over 65 years of expertise, support and guidance through this difficult time, including help with an Ottawa debt consolidation plan.
With serious debts mounting and a consumer proposal or bankruptcy potentially on the table, consulting with a financial professional is in your best interest. We have 8 locations across Eastern Ontario to serve you, including Ottawa, Brockville, Smiths Falls, Kanata, Kingston, Orleans, Pembroke, and Cornwall.