Category Archives: Divorce Finances

Workers' Compensation Part of Income for Support PaymentsIllinois divorce courts consider workers’ compensation benefits and personal injury damages much the same way as other properties. They are marital property if they originated during the marriage. Any compensation awarded before or after the marriage is non-marital property. Determining which status applies can be crucial because injury compensation is often lucrative:

  • Workers’ compensation covers medical costs and gives periodic payments to replace lost income due to temporary or permanent disability; and
  • Personal injury compensation is usually a lump sum but can be more valuable than workers’ compensation because it includes pain and suffering.

Even when injury compensation is not a marital property, it can still affect spousal maintenance and child support payments.

Spousal Maintenance

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How Divorce Affects Tax Filing Status, DependentsThe alimony deduction for federal income taxes has been in the spotlight this year because of looming changes to the federal tax law. As previously discussed, divorcees who finalize their divorce after December 31, 2018 will no longer be able to claim the spousal maintenance they pay as a tax deduction or be required to report payments they receive as taxable income. Child support payments are already treated in this way. People with existing divorce agreements or who finalize their divorce before 2019 should be able to continue using the alimony deduction (in which the payor is allowed to deduct alimony from their taxable income, and the recipient must report alimony as taxable income) indefinitely, although the long-term consequences of the new law are still unclear. However, there are other ways in which divorce affects how you file your taxes.

Filing Status

Your tax filing status may change if you are newly divorced or in the process of getting divorced. Whether you file as single or married will depend on when you divorced:

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Financing the Cost of Your DivorceDivorce is an expensive process. Beyond what you may give up in the divorce settlement, you are responsible for paying attorney and court fees. You may need an alternative form of financing if your available income cannot pay for your legal fees. Establishing credit or liquidating assets involves its own risks. You must carefully consider the consequences of each form of financing before making your decision.

Bank Loans and Credit Cards

If you have a good credit rating, you can pay your legal fees by taking out a loan or charging it to a credit card. Naturally, you will pay more over time because of interest. However, you must also consider what level of payments you will be able to afford after your divorce. You, and not your spouse, are responsible for the debt you create after you file for divorce.

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How Divorce Affects Disability BenefitsWhen one person in a marriage is eligible to receive federal disability benefits, both spouses may come to rely upon the payments. The benefits are meant to make up for the spouse’s inability to secure employment. If the couple divorces, the disabled spouse will likely see his or her disability benefits unaffected or increased. The non-disabled spouse may individually receive benefits, depending on which program the disabled spouse is using.

SSI vs. SSDI

Any person age 65 or older or an adult with a qualifying disability may apply for Supplemental Security Income (SSI) and Social Security Disability Income (SSDI). The difference between the two has to do with work experience and financial need:

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Filing for Bankruptcy When Getting DivorcedSpouses share their debts during a marriage. When they decide to divorce, those debts are split between the two sides, with each spouse taking responsibility for paying a portion of the debt. However, creditors hold divorced spouses equally liable for their marital debts, regardless of the terms of the divorce settlement. If one divorced spouse fails to pay his or her share of the debt, the creditor will go after both spouses. A couple facing overwhelming debt can file for bankruptcy to either discharge the debt or create a repayment plan. Bankruptcy may allow a divorcing couple to reduce or eliminate the shared debt that will tie them together after their marriage has ended. Couples should consider filing for bankruptcy before they divorce.

Types of Bankruptcy

People most commonly file for either chapter 7 or chapter 13 bankruptcy. The differences between the two may determine which type a divorcing couple prefers and when they want to file:

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Goostree Law Group

Goostree Law Group

 555 S. Randall Road, Suite 200
St. Charles, IL 60174

 630-584-4800

 400 S. County Farm Road, Suite 300
Wheaton, IL 60187

 630-407-1777

Our Illinois divorce attorneys represent clients in Kane County, DuPage County, Kendall County and DeKalb County, including Geneva, Batavia, St.Charles, Wayne, Wasco, Elburn, Virgil, Lily Lake, Aurora, North Aurora, Elgin, South Elgin, Bartlett, Crystal Lake, Gilberts, Millcreek, Maple Park, Kaneville, LaFox, Yorkville, Oswego, Plano, Sugar Grove, Big Rock, Bristol, Newark, DeKalb, Sycamore, Naperville, Wheaton, West Chicago, Winfield, Warrenville, Downers Grove, Lombard, Oak Brook, Streamwood, Hoffman Estates, Barrington, South Barrington, Lake Barrington, Schaumburg, Big Grove, Boulder Hill, Bristol, Joliet, Kendall, Lisbon, Minooka, Montgomery, Plainfield, Sandwich, Yorkville and many other cities.

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