Establishing the âNeeds Hierarchyâ
Whether one not or both parties are in financial distress, the âneeds hierarchyâ should be followed to determine expenses paid. The hierarchy should go like this:
First: The People
Second: The Possessions
Third: The Credit Rating
The emotional, physical, educational, and mental condition of the parties, including children, are protected first. Food, clothing, and shelter come next. Protection of the possessions comes after protection of the people. These include payments on a home mortgage or vehicles payments. Lowest level in this hierarchy are unsecured creditors. The majority of all the entries in this section will be credit cards.
Making this hierarchy work can be challenging. People who pay their bills on time, or have an adequate cushion put away for emergencies, or being financially sound generally have difficulty switching to survivor mode. Emotions involved in this divorce process skew logic. The lines between hierarchy levels begin to blur. Individuals find themselves starting to live off their credit cards during the divorce. The blind application of this hierarchy is not the best maximization of all the available resources. You could replace any assets if lost by failing to make any payments, and credit ratings could also be rebuilt if they are destroyed.
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