Emotions can run wild during a divorce, making everything else in your life seem less significant. It can be difficult to make clearheaded decisions. But it’s important that you think about your future when it comes to your finances. It can be somewhat confusing when it comes to untangling your finances. Here are some great tips.

Credit Accounts

Sift through you credit accounts and make sure you have a good understanding of all of them – whether they’re jointly owned, solely owned, or if you are an authorized user on your spouse’s account (and vice versa). If you don’t have any individual credit accounts, apply as soon as you can before the divorce so you can use joint income to qualify.

Before dividing account and balances due, it’s a good idea to make a budget based on post-divorce income to see how much debt you can independently handle. Speak with either an attorney or financial advisor who can explain your state’s laws on debt responsibility. Any existing credit accounts including credit cards, car loans, and personal loans can be handled in three different ways:

Agree with your spouse to pay off and close your accounts now. Depending on your financial situation, this may be your best choice. Close joint bank accounts and remove one another as authorized users on each account. By taking care of everything at once, you decrease the risk that your spouse will run up charges or fail to pay the debt they owe as it’s later divided.

Close any existing joint accounts and take away authorized user privileges, but leave the balance to be addressed later during negotiations. This will stop new charges, but it still leaves you at risk. If your ex doesn’t pay as he or she agreed, creditors may come after you. They are not bound by a divorce decree.

You could also do nothing. It’s not illegal to do nothing at all, but this is extremely risky.

Home

Deciding what to do with a home in a divorce comes down to three basic options:

One spouse purchases the home from the other after reaching an agreement on fair market value. This might not be your best option, though. Unfortunately, the bank may not want to allow removing the name of the selling spouse off of the loan because then one person would be responsible for that loan as opposed to two. Refinancing may also be troublesome as well. One spouse may be qualify for a loan, but, there is, many times, a difference between the amount of the loan someone can qualify for and the amount of payments they can make.

You can sell and split the amount. Local markets will determine the value of your home. This could be a great option. The difficult part is that many people get attached to their homes.

You can continue as co-owners. This would come with a high level of difficulty. Not only would you be living with your ex-spouse, someone who you may hold some resentments toward, but you’d essentially be in a business relationship with them in owning and paying off the real estate. Which could become a serious problem if one is having financial trouble.

Investments

It’s important that each partner understands the nature of their investments before they agree to any division. Consider:

Does the investment make sense for your future? If your spouse is more of an investor than you are, you might not want to keep assets such as large investments with high risk level. It’s better to sell before dividing an investment account. If you decide to liquidate the account after the fact, you could bear the entire tax impact, which could be expensive.

What type of account is it? Assets in a qualified retirement plan (401K, 403(b) or a pension plan, etc.) receive preferential tax treatment. You’re allowed to keep that tax-favored status if you split the money under a qualified domestic relations order (QDRO) so long as you do a direct transfer.

What fees will there be for liquidating these accounts? An investment firm may see a divorce and believe they are going to lose half of an account, and so they may charge fees for outgoing transfers in order to make up for their loss. These fees can be negotiable. You may even be able to avoid these fees by opening separate accounts at the firm.