Money & Career

How to get a divorce without going broke

When actress Katie Holmes walked away from her five-year marriage to superstar Tom Cruise, people were shocked and impressed. Rumours had been swirling that she had been planning her exit for months and used a disposable cell phone to consult with lawyers.

Katie Holmes and Suri in New York October

Keystone Press

When actress Katie Holmes walked away from her five-year marriage to superstar Tom Cruise, people were shocked and impressed. Rumours had been swirling that she had been planning her exit for months and used a disposable cell phone to consult with lawyers. Many believed it was the most stealth and savvy divorce in celebrity history. (She got full custody of their daughter and $400,000 a year in spousal support.) For anyone who is thinking about divorce, planning ahead is vitally important to the process. Make sure you know what you’re entitled to and follow these eight steps:

1. Research your rights
The Government of Canada has a quick primer on divorce law to give you some background on what you’re entitled to and what your rights are.

2. Get your papers ready
Make a list of your joint assets and debts. Get records of your bank statements, registered retirement savings plan (RRSP) assets and any pension assets you or your spouse may have. Also, make sure to get records of tax returns, credit card reports, mortgage papers and insurance policies too.

3. Open your own savings account
Open a savings account in your own name, if you don’t already have one, and start putting money aside for your legal bills, living expenses and emergency fund. It’s a good idea to estimate what your living expenses will be for at least six months to know what you need to save.

4. Clear your debts
Get rid of any outstanding debts that you have and pay all your bills before getting a divorce.

5. Check your credit report
Since you’ll be starting a new life on your own, you may need access to credit. Check your credit report through one of Canada’s three major credit bureaus: Equifax Canada, TransUnion Canada, Northern Credit Bureaus Inc. If you see any errors, make sure you clear them up.

6. Get advice
Speak to a lawyer and find out what your options are, from spousal support to child custody. It’s very important to have the knowledge ahead of time so you’re taking the right steps to ensure the outcome will be in your favour.

7. Think carefully about alimony and child support
If you’re thinking of waiving your right to support, make sure you think it through and consult with a lawyer. Once you waive your rights, it can be hard — sometimes near impossible — to get them back. Also, consider taking a lump sum payment for alimony instead of monthly cheques. If your ex defaults on monthly payments, you may have to go back to court.

8. Make sure you can afford the house
If you’re thinking about keeping the house, do the math to see if you can afford household payments post-divorce. From repairs to expenses like heat and hydro, you could may not be able to uphold a house on your income alone.