By Jasmin Brown, BDO First Call Debt Solutions

BDO First Call Debt Solutions

Tackling debt and affordability challenges after a divorce

Mar 4, 2020 | 9:10 AM

It is no secret that financial problems can contribute to relationship breakdown. However, ending a relationship does not always erase financial challenges. Families across Canada are struggling to make ends meet, manage debt and prepare for their future.

Unfortunately, divorce can sometimes heighten the financial struggles when former spouses venture out on their own. If debt and affordability challenges continue to be a source of stress after a marital separation, it is important to take the necessary steps to take control of your finances. The good news is you do not have to do this on your own. There are a number of strategies and resources that can help. Here are a few:

Commit to expanding your financial knowledge

If money management issues or debt problems contributed to your marital separation, consider what you can do differently now that you are on your own. Financial literacy is a lifelong process. Finding a new debt management tool or learning a new skill can help you deal with debt, balance wants and needs, prepare for retirement and more.

Online resources like Get Smarter About Money and the Financial Consumer Agency of Canada (FCAC) can also help you rebuild your finances after separation and divorce.

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Create a financial plan for your new reality

Start by creating a workable, realistic budget that includes all of your current expenses and accounts for any change in your household income. Any spousal payments, child support and/or alimony you provide (or receive) will affect your short and long-term goals.

Keep a close eye on your spending and expenses. Living within your means and avoiding additional debt can help smooth your financial transition. Debt can snowball quickly, so be sure your budget includes a solid debt repayment strategy and regular contributions to an emergency fund to cover unexpected costs.

Focus on building a positive credit history

Having a history of using credit responsibly will help you get approved for a credit card, loans, rental agreements and more. Creating your own credit history is especially relevant if your credit cards and loans were registered in your former spouse’s name or held jointly during your marriage. One strategy would be to apply for a low-interest credit card in your name that you can use for purchases or bill payments that you are able pay off in full each month.

Deal with any problem debt as quickly as possible

If you are struggling to repay your debts after your divorce because your income has decreased, there are solutions available. A Licensed Insolvency Trustee will review your financial situation and explain all available debt relief options, including a consumer proposal and bankruptcy. It is worth noting that only a Licensed Insolvency Trustee is authorized and licensed by the Office of the Superintendent of Bankruptcy to file a consumer proposal or bankruptcy on your behalf.

Rebuilding your finances after divorce can take time, especially if you have a lot of debt. But don’t let that stop you from tackling your debt challenges head-on. A Licensed Insolvency Trustee can help.