5 Types of Divorce – How to Get Divorced Without Money Problems

Choosing the right type of divorce can help divorcing couples avoid money problems. These five divorce options will help separated or divorcing couples prepare financially and emotionally to end their marriage.

“Divorce can be very costly, depending on the method it’s done,” says certified divorce financial analyst Lisa Decker. “There are several options for divorce settlement available, some of which most people are not even aware of.”

For more info on how getting divorced affects your financial life, read Divorce & Money: How to Make the Best Financial Decisions During Divorce.

And, here are five types of divorce, plus several money tips for divorcing couples…

5 Types of Divorce – How to Get Divorced Without Money Problems

1. Pro Se Divorce — Divorce without an attorney.  This type of divorce is inexpensive financially, but the costs associated with making a money or legal mistake can be very costly in the long run.  Bottom line…if you want to leave your husband, invest in or a least a consult with an Attorney and a Divorce Financial Analyst to know what land mines you might be stepping on.

2. Divorce mediation — A neutral divorce mediator helps divorcing couples to come to their own agreements.  Many times a financial neutral is brought into the process to advise clients on the financial aspects of their choices.  Agreements are taken to an attorney for the drafting of the legal documents.

3. Collaborative Divorce — A team approach that usually consists of each party having their own attorney and coach (trained therapists who act as coaches to get parties through the divorce process), a financial neutral and a child specialist, if needed.  This is usually a more peaceful and productive type of divorce. Collaborative divorce has all parties committed to settling in the end, or having to disband and start all over again with new counsel.

4. Traditional Litigation — The best option for contentious situations….this type of divorce is fighting fire with fire.  But beware; some unscrupulous attorneys may fan the flames to drive up fees, making the divorce more expensive.  Decide up front what is worth fighting for and over.  Reality check – do you want to finance your own retirement or your attorney’s?

5. Modified Approaches – The Collaborative Divorce without the full team.  Another way to prepare financially for a divorce is to work with a financial advisor to get pre-divorce financial planning in place. Then go forward to one of the other divorce options, armed with a game plan. If you need a financial planner, you might find Tips for Choosing a Financial Planner helpful.

How Financial Assets Are Divided During Divorce

How financial assets are divided during divorce varies from state to state.

Community property states generally split everything 50/50, taking into consideration where the source of that asset came from, then dividing it accordingly.

Equitable divisions states may separate assets according to marital and separate assets (gifts and/or inheritances received during the marriage or property owned prior to the marriage) when looking at division.  These states may look at what is fair or equitable, rather than what is equal.

It is almost always in the best interest of couples to work things out on their own rather than leaving it up to a judge or jury.  You never know what that outcome may be and it can get extremely expensive if you have to go that route.

Surprising Things About Divorce and Money

  • Divorce courts do not have the power to wipe out your obligations to lenders, such as credit card debt, auto loans, or mortgage companies.   If your name is still attached to a debt then you are still liable for it, even if your spouse has been the one ordered to pay that debt.
  • All assets are not created equal.  Some have better tax consequences than others.  50/50 is not always what it appears to be!

Getting a divorce can be less painful if you choose the right type of divorce — and the right type of divorce mediator!

For more info about getting divorced without money problems, read Divorce & Money: How to Make the Best Financial Decisions During Divorce.

Lisa C. Decker, Certified Divorce Financial Analyst, helps her clients to “Divorce Your Spouse, Not Your Money.


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6 thoughts on “5 Types of Divorce – How to Get Divorced Without Money Problems”

  1. There are definitely ways to plan ahead and prepare for your divorce,especially financially. We might not want to think about these things, but they’re necessary if you don’t want to be dead broke coming out of a divorce.

  2. Laurie Pawlik-Kienlen

    I don’t think all divorces lead to depression and anger! For some people, divorce is the best decision they can make for them and their families.

    It may also depend on the type of divorce they choose.

  3. Divorce will always lead to depression and anger towards the other party. As much as possible, people should avoid divorce.

  4. Thanks for the clarification between a financial advisor and a financial neutral, Lisa. I’d never heard the term before — and I had no idea there were so many ways to prepare financially for a divorce!

    Kathleen Turner and Michael Douglas needed a financial neutral in “War of the Roses.” :-)

  5. Lisa C. Decker, CDFA

    Thank you for asking for further clarification. When a Financial Advisor, (in the information I gave I am referring to someone with specialized knowledge of Divorce Financial Planning), acts as a financial neutral they are essentially being just that…neutral. In other words, they do not represent either party, but are there to guide the individuals in making their own decisions, while bringing the financial advisor’s knowledge and expertise to the table. They are there to help facilitate the process and help couples to understand any potential problems or pitfalls associated with their choices.