8 Steps to

Stabilize Your Fears

Obtain Financial Health
Succeed in the Aftermath of Divorce

By Stephanie Loiacono, CFA

9 Baywoods Drive
Scarborough, Maine 04074
Email: steff@maine.rr.com, Phone: (207) 415-7193

Unpublished work©2008 Stephanie Loiacono

 Introduction
No one would ever have crossed the ocean if he could have gotten off the ship in the storm.
Charles Kettering

The ink is dry on your divorce papers and then it hits you: How will I pay

the bills? You’ve made it through your divorce, but now you must come to grips

with an enormous number of decisions and crises. The financial damage caused by

divorce can be daunting. You’re buried in debt, you’re buried in emotions, you

need immediate help and good information, but there’s no time to plow through a

lengthy book on finances.

If this sounds like you, Financial S.O.S. for Divorced Women will become

your most trusted resource. This book is a simple, step-by-step guide to help you

overcome your fears, get control of your finances, and make a plan to rebuild

financially in the initial years following divorce.

Who managed the money during your marriage? I’ll bet you let your

husband make all the financial decisions. Most of us do. Maybe we’re too

intimidated by financial terms or distrust our own instincts about managing money.

Maybe we’re so swamped being housekeeper, cook, van driver, child caretaker,

and lover that we happily delegate the tedious job of paying bills and managing

investments to men. Regardless, when divorce hits, most of us have never been in

charge of our own money or worked outside the home. We’re overcome by

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feelings of guilt, shame, grief and fear due to the end of our marriage. Our self

esteem is shattered; the last thing we want to do is crunch numbers. But it is

exactly at this moment that we make the wrong financial moves, often to the

detriment of a safe, secure future for ourselves and our kids.

What do you need most at this difficult time? You need straightforward,

easy-to-follow financial information to help you get back on your feet. You need

practical, professional advice. You need to hear from other divorced women

who’ll inform and inspire you to take charge of your finances, right now. All of

this – and more – is what you’ll find inside Financial S.O.S. for Divorced Women.

Who am I to give you advice? I’m a skilled professional with more than 20

years experience in finance and investments. But, I’m also one of the millions of

lives affected by divorce. Half of all women in this country get divorced. When

they do, their standard of living changes drastically. The financial reality is that

most divorced women are single moms, who are nine times more likely than

married women to live in poverty. They’re also 150 times more likely than others

to go bankrupt. 1 I wrote this book so you don’t have to become one of these grim

statistics.

1
National Center for Health Statistics

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 You’re not alone, and you CAN take charge of your financial life. I’ve

outlined 8 steps I believe are the most important ones to take immediately

following divorce. It’s critical to know what to do – and what not to do – when it

comes to your money during those first months and years after divorce. Inside

these pages you’ll find specific advice that’s easy to understand and easy to carry

out.

Your most pressing questions will be answered as you go chapter by

chapter throughout this book. You’ll learn to review your divorce decree and

understand its long-term implications. From that, you’ll create an action plan for

what to do with a settlement, and what to do when alimony expires and child

support ends. You’ll hear about the dangers of joint accounts and joint loans that

may still be open after your divorce, and what to do about it. A post-divorce task

list is provided, to serve as a useful reminder of the 10 things you need to do to

wrap up loose ends and protect what you won in divorce. There are tips on how

to organize bill paying and other important documents. You’ll also hear about

ways to make money and still be on hand for your kids, including legitimate

work-from-home businesses.

Together, we’ll create a plan that reflects your goals and values. We’ll

chart a course to live within your means, get out of debt and plan for retirement.

I’ll explain the financial jargon and teach you to speak like a pro. You’ll learn

Unpublished work©2008 Stephanie Loiacono

how to find someone you can trust with your money, and how to invest for a

promising future.

The 8 steps aren’t difficult to do. But, to make it happen you have to

set aside your broken heart. You’ve got to be willing to overcome your fear of

handling money. It’s very hard to make sound decisions when your emotions are

as intense as they are after divorce. But, you can solve your money problems.

You are smart enough to make a financial plan and pull it off. I’ll show you

how. If you tackle each task, one by one, the journey to your new financial life

will go more smoothly.

You won’t be in this situation forever. I promise, no matter how bleak it

looks right now, you will climb out of the hole divorce put you in. But, you’ve

got to be disciplined and patient. You have to follow the 8 steps.

You’re not out there alone, because you have this lifeline. So let’s get

started!

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 CHAPTER 2

Step 2
Get Your Ex Off All Joint Accounts, and Other Post-Divorce
Tasks
“If your ship doesn’t come in, swim out to it!” Jonathan Winters

When my friend, Angie, divorced after 10 years of marriage, the court

ordered her Ex to make payments on their joint credit account. At first he didn’t

pay on time; then not at all. Because Angie never got around to removing her

name from their joint account, the creditors came after her. Sadly, she was on the

hook for $30,000 of credit card debt, which at that time was the sum total of her

annual salary. What Angie didn’t understand was that credit card companies

don’t know and don’t care about divorce agreements. Her name was on the

account and she was held responsible. That one mistake set her up for years of

struggling and severely damaged credit. A decade later, her parents still had to

co-sign her car loan even though by then her income exceeded $100,000.

There are 10 critical Post-Divorce Tasks¹ you must do to wrap up loose

ends and declare your divorce truly final. I believe the most important task of all

is to close all joint accounts. If you still have joint accounts open with your Ex,

you’re navigating dangerous waters. Your creditors are clueless about the details

of your divorce, and don’t care what the court told your Ex to pay. From their

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point of view, they want to receive the full amount owed to them, and on time. If

your name is still on the account, you are responsible. Any late payments or

bounced checks by your Ex will show up on your credit report. These blows take

7-10 years to disappear from your credit history.

Task # 1: Close Joint Bank Accounts and Joint Credit Cards

9 Review all joint bank accounts. Jot down a list of all the bank accounts,

brokerage accounts, and credit union accounts you had while you were married.

Have you closed them all? If not, do it immediately. Cancel these

Jargon Alert!
Credit Bureau: an agency that
accounts in writing and be sure to request that they report each collects and sells credit
information on individuals. A
credit report lists how
account as "closed by customer" to the credit bureaus. individuals manage their debt and
make payments, how much
untapped credit is available and
9 What joint credit cards do you have? It’s especially whether they’ve applied for any
loans. The three major credit
reporting bureaus are Equifax,
Experian and TransUnion.
important to pay them off and close them. Remember that

a credit card account isn’t officially closed until the entire balance

is paid and closed in writing. Can you use savings or sell a joint

asset to pay off the debt and close the card? If not, open a new credit card in your

own name and have your Ex do the same. (I’ll give you more information on how

to apply for your own card, later). Both of you should then transfer the debt

amounts you agreed to assume onto your own card, and close out the joint credit

card account. If either you or your Ex have poor credit and are unable to obtain a

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card on your own, find a family member or close friend who’d be willing to co-

sign on a new account.

Some joint accounts can’t be closed immediately, either because the remaining

balance can’t be paid in full, or there’s a loan outstanding that must be refinanced

(like a home mortgage). You’ll have to work closely with your Ex to manage

these obligations. Consider opening a separate bank account specifically to make

and track these payments. Be actively involved: do not surrender management

of these payments to your Ex! Open an account that permits online banking.

That way, you can establish direct links to outside accounts that you and your Ex

hold separately. Deposits can be made quickly to cover a payment or automatic

payments and withdrawals can be set up to ensure the loan gets paid on the due

date.

9 Options for dealing with joint home ownership and mortgage debt:

If you still have joint ownership of the family home and mortgage with your Ex,

here are a few things you can do:

1. Call your lender: Some lenders might agree to take your Ex’s name off

the home loan if they have proof that you won claim to the house in the divorce.

Make a call to your lender and find out. It’s more likely, though, the bank will

require that the house be refinanced and the loan be put solely in your own name,

or your Ex’s.

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2. Sell the house: You may have fought tooth and nail to win the family

home; however, this may not be in your best long-run financial interests. You

may find it difficult, sometimes impossible, to meet the mortgage payments with

only the meager child support payments your lawyer negotiated for you. To miss

your monthly mortgage payments, however, is credit suicide. Don’t let your

emotions cloud your judgment! Your best option may very well be to sell the

house. You can sell it on through a real estate agent, or you can
Jargon Alert!
Home Equity: what’s
sell it to your Ex and split the equity. Keep in mind that the left over after you sell
your house and repay
your mortgage loan.
disruption of moving out won’t be nearly as damaging to you

and your kids as the longer-term financial problems of remaining in a house you

can’t afford. Sometimes a fresh start in a new house that you don’t associate with

your failed marriage can be very healing, as well.

3. If you can’t sell yet: If you’re unable to refinance the mortgage or sell

right now, make a plan with a timetable to sell or refinance as soon as possible.

Meanwhile, do not take your name off the title; do not sign a “quitclaim

deed”. If you do, you’ll be left with all the responsibility of the mortgage

payments, but without an ownership share in your home. Use Jargon Alert!
A quitclaim deed is a
the separate bank account I mentioned earlier to manage the formal written document
that transfers your rights
and ownership to someone
else, usually a buyer.
payments. Talk to your lender to ensure you’re informed of any

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late payments by your Ex. That will give you the chance to make up the

payments, if necessary.

If your Ex isn’t holding up his end of the bargain on jointly held obligations,

try to pay those debts yourself. I know it isn’t fair. But, the reality is that you’ll

severely limit your long-term financial options if your credit profile is ruined

now. My friend Angie negotiated a payment plan with her credit card company,

and paid back the entire $30,000, bit by bit. When she made that last payment,

she celebrated and bought a spa vacation (in cash) that she’d wanted to go on for

years. You can do it, too!

Task #2: Be Sure to Refinance Your Home Mortgage

If you won the family home in divorce, you will need to refinance the

mortgage. Don’t trust your Ex to pay the mortgage on the house if it now

belongs to you! Work with a bank to obtain a new mortgage in your own name,

paying off the old mortgage as a result. You should obtain confirmation in

writing from the bank that your name has been taken off the old mortgage. This

is accomplished when the bank files a release of the old mortgage with the

County Deed Registry and removes your name from the mortgage. Your bank

should send you a copy of this document.

Task # 3: Transfer the Title of Your Home or Other Real Estate

into Your Name

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 Refinancing the mortgage does not complete the process of converting

home ownership to you. It’s also necessary to finish the paperwork

that transfers the title of your home or other real estate into your Jargon Alert!
Title: a legal document that
own name. This is accomplished by having your Ex sign a proves you have an
ownership share in your
home.
quitclaim deed. Your lawyer, mediator or a trusted real estate

agent can help you with this.

For years after her divorce, Patti continued to live in her marital home with

her three boys. She paid the mortgage, but never converted the title into her own

name. Meanwhile, her Ex — who owned a dry-cleaning store — got himself into

serious debt. Soon, creditors put a lien on his personal property; namely, Patti’s

home. When Patti wanted to move away from Long Island for the slower pace of

a New England town, she found herself unable to sell her house. The financial

judgment against her home due to her Ex’s delinquent debts was so large that if

she sold, she’d have had to come up with a sizeable sum to help pay off his

creditors. Needless to say, Patti still lives in Long Island.

As Patti’s story shows, the consequences of not changing a real estate title into

your own name alone can be dire. Don’t forget to change the title!

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Task #4 : Change the Title of the Car into Your Own Name

If your Ex is turning over ownership of a car to you as part of your

settlement, make sure he transfers the title to you. You can get the right forms

from the Motor Vehicle Department in your state. After your Ex signs over the

car title to you, you should mail back the forms to the Motor Vehicle Department

so it becomes part of the official record. Is there also a loan on the vehicle? If

there is, you should get a new loan in your own name. If you allow your Ex to

continue to pay the car loan, you run the risk that he’ll stop paying and your car

will be repossessed.

If you can’t get a new car loan in your own name, consider selling the car,

paying off the loan, and buying a less expensive used car. If this doesn’t seem

feasible, you might be able to work out an arrangement whereby your Ex pays

the car loan, but his support payments to you are reduced by that amount until the

loan is paid off. If you go this route, however, be sure to get monthly statements

from the car finance company to confirm payments have been made. That way,

should there be any missed payments you’ll have the option of covering these

yourself rather than going without wheels!

Task #5: Update Your Auto Insurance

Contact your auto insurance company and make sure you have adequate

auto insurance. You’ll want to verify that the policy is up-to-date and all

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premium payments have been made. Don’t trust your Ex to make the auto

insurance payments! If he doesn’t pay the insurance bill, you could be charged

with driving without insurance. In most states, this means your license could be

suspended for a year and you’ll be forced to walk or use public transportation to

get from place to place.

Tell your insurer to change ownership of the policy into your own name. Take

your Ex off the policy as an allowed driver. Be sure your correct name and

address is on file with the insurance company.

Task #6: Apply for a New Driver’s License

If you change your name after divorce, and/or if you change addresses, don’t

forget to apply for a new driver’s license.

Task #7: Tell Creditors, Service Providers and Government

Agencies That You’ve Changed Your Name

If you’ve changed your name as a result of the divorce, you’ll need to

ensure the change is reflected in all official documents. Send a copy of your

divorce judgment that changes your name to the following:

9 Department of Motor Vehicles in your state

9 Social Security Administration
9 Your bank
9 All credit card companies
9 Your mortgage lender
9 Your auto and home insurance company
9 All utility companies: water & sewer, electricity, cable, etc.

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 9 State tax authority
9 Your employer

Task #8: Update Beneficiary Designations and Your W-4 Form

Be sure to remove your Ex from any legal documents that name him as

beneficiary. This includes retirement accounts, pension plans, investment

accounts, and health insurance policies. If you’re employed, you should contact

your human resources department to do this. Don’t forget to also update your W-

4 form, if it claims your Ex as a withholding exemption.

Task #9: Update Your Will and Life Insurance Policies

If you have a will, you’ll need a new one. A will that was created while

you were married probably leaves property to your Ex and may even give him the

right to make medical decisions for you (also called a “living will”). You’ll

definitely want to change these provisions now that you’re divorced. Also, be

sure that your Ex no longer has power of attorney over your estate. Power of

attorney gives him complete authority over your assets. This means your Ex

could legally transfer money from your bank accounts or retirement accounts

over to himself, and even take out a loan in your name.

Estate planning is a complicated business. Seek the help of an estate

lawyer when revising your will. If you can’t afford one, there may be free legal

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services available in your state. See “Resources” at the end of this chapter for

more information.

Don’t overlook life insurance policies that you and your Ex had while still

married. For example, if you have a life insurance policy through your employer,

contact your human resources representative and tell them to remove your Ex as

beneficiary. Alternatively, if your Ex is supposed to keep life insurance in place

for you and your kids as beneficiaries, contact the insurance company from time

to time to make sure the premiums are still being paid and the policy hasn’t

lapsed.

Task # 10: Make sure any retirement funds or pensions are legally

divided.

If you’re entitled to receive a portion of a retirement fund or pension as

part of your divorce, you must ensure these are legally divided. To do so, a

“Qualified Domestic Relations Order” (QDRO) is executed. This is a separate

court order that tells a retirement plan administrator to divide up a pension plan

or 401K according to your divorce agreement. You should contact a lawyer,

mediator or actuary to do this for you, because it is very complicated. QDRO’s

usually cost around $500. Although this may seem like a lot of money, find a

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way to pay for it! Without a QDRO, you risk losing your rights to retirement

funds.

In some cases, QDRO’s can also be used to access your Ex’s retirement

fund if he fails to pay you child support. If your Ex owes a lot of money in back

child support, talk to an attorney or your state child support agency. Ask them to

investigate the possibility of tapping your Ex’s retirement account to pay what

you’re owed. Remember that a QDRO, once approved and executed by the

court, must then be sent to the retirement plan administrator to close the loop.

Success!

You’ve done it! You’ve taken the first steps towards financial recovery. In this

chapter, you got control of your fears, reviewed and closed any joint accounts left

open, and completed all of the Top 10 Post-Divorce Tasks. You’ve looked

beyond your pain, protected your rights and assets, and set yourself up for a

stronger financial future.

You’re on your way, but, there’s more. Read on!

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Footnotes:

¹Based in part on information provided by Theodore Sliwinski, Esq.

Resources

Top 10 Post-Divorce Tasks Checklist

____ Close all joint bank accounts. Close all joint credit card accounts.

____ Refinance your home mortgage. Have your name removed from the old mortgage.

____ Execute a quitclaim deed to put the title of your home solely in your own name.

Change the title on your car into your own name. If necessary, get a new car loan in your
____ own name, too.

____ Update your auto insurance.

____ Apply for a new driver’s license.

Inform all creditors, government agencies and service providers of your new name and
____ address.

____ Update Beneficiary designations and W-4 forms.

____ Update your will and life insurance policies.

Make sure retirement funds are legally divided by executing a Qualified Domestic
____ Relations Order (QDRO).

Links to legal services and information on the internet and in your

home state:

http://www.ptla.org/links.htm

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