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Kane County divorce lawyerdivorce can be a stressful and contentious matter, and not just because of the impending end of the relationship. Financial matters are also particularly important in divorce, and they can have a lasting effect on each party’s quality of life. If you are planning on filing for divorce or have recently been served, beware of these money issues in your case and learn how an experienced divorce lawyer may be able to help protect your interests and financial future.

Housing and Living Expenses

When couples split, one typically leaves the family home. The other might stay, or the couple might agree to sell the home and have both parties vacate the premises. Regardless of the living arrangements that you agree to, you should prepare for a possible increase in living expenses. You should also consider how a decrease in income—a common by-product of divorce—will affect your financial situation. As an example, you might consider downsizing before the proceedings begin if maintaining the family home is not a viable option.

Challenges for Disadvantaged Spouses

In a marriage, one spouse might handle all of the couple’s finances, bills, and expenses. In some cases, this same spouse is also the sole income earner. When these two realities are combined, it can create a serious disadvantage for the non-earning spouse. While maintenance and child support may be available, including while the divorce proceedings are pending, disadvantaged spouses often lack the knowledge or resources to pursue such provisions on their own. If you are in such a position, an experienced attorney can help, even if you do not have funds of your own. Do not forgo talking to a lawyer just because you lack available cash. Instead, find out what options may be available to you.

Kane County divorce attorneyApart from acknowledging how much will be needed for rent and basic monthly expenses after a divorce, it is all too easy, and common, for divorcing couples to find themselves shelving the financial aspect of the split until after the process is finalized. When you consider the emotional toll of the end of a marriage and additional stressors such as parenting plan arrangements, a potential relocation, and maybe even a new partner for one or both parties, money is often one of the last things couples wish to think about. This can be especially harmful for those who have very limited funds to begin with, or for those who have little to no employment options when the marriage unravels. 

The Importance of a Financial Game Plan

No matter how much or how little money you have to work with, the lack of a financial game plan can result in a divorce that does not turn out in your favor. For example, if you and your spouse were already in serious debt prior to the separation, those debts may only get worse and become more unmanageable if they are ignored. As overwhelmed as you may already be, avoidance is never the answer where your financial well-being is concerned, especially when you are about to experience a significant shift in income and overall lifestyle due to the split.

Why It Pays Off to Address Financial Matters Early On

Whether you have had minimal time to prepare, are currently a stay-at-home parent and do not know where to turn for help, or are simply scared and are avoiding money matters because your mind is on overload, making a plan to address finances early on can help you turn the situation around. Here are three reasons why addressing your finances is important:

5 Tips to Help You Prepare Your Finances Before Your Illinois DivorceIt has often been said that preparation is the key to success, and getting divorced is no exception. Most areas of your life will change after a divorce, including your living situation and parenting situation. Even though your divorce is an emotional process, it is just as much a legal and financial process.

Dealing with marital finances during a divorce can be tricky, especially since financial issues are often the root of disagreements during divorce negotiations. Proper preparation is crucial when it comes to the financial side of your divorce. Here are a few ways you can prepare your finances before you begin negotiations:

Tip #1: Collect Your Records

The first thing you need to do is to gather all of your financial information from the past couple of years. This can help you get a good idea of your financial picture and will ensure that you have everything ready as you begin the negotiation process. You should try to gather records such as:

What Happens If Your Ex-Spouse Files for Bankruptcy?Completing a divorce will drain your personal finances to a certain extent. You are giving up a portion of your marital assets and losing your spouse’s income as a means of helping pay expenses. Some people’s debt problems following a divorce become bad enough that they need to file for bankruptcy. You can work with your divorce attorney to try to avoid this outcome by ensuring that you receive a favorable division of properties and debts, as well as spousal maintenance if your spouse has a greater income than you. However, your former spouse may have their own financial struggles that lead to them filing for bankruptcy. Even though you are no longer married, it is possible that their bankruptcy could leave you liable for some of their debts.

How Does Bankruptcy Work?

To understand how your former spouse’s bankruptcy could affect you, you first need to know what the bankruptcy process entails. A person files for bankruptcy when they believe they are incapable of repaying their debts and are in danger of losing assets to their creditors. An individual will use either Chapter 7 or Chapter 13 bankruptcy, depending on which one they qualify for. At the end of the process, the filer is allowed to discharge most debts that were not repaid during the case. Discharge means that the filer no longer has any obligation to repay the debt.

How Might You Be Liable After the Bankruptcy?

While the creditor cannot collect from your former spouse after a bankruptcy discharge, they can still collect from you if you are also liable for the debt. Dividing debt in your divorce agreement does not remove your legal liability for the debts that your spouse agreed to pay. To eliminate your liability, you need to modify the debt agreement to remove you from it. The creditor may not want to modify the agreement if it thinks your former spouse does not have enough income to repay the debt on their own. The creditor may understand that one of you is taking sole responsibility for making debt payments, but that will not stop the creditor from turning to you if your former spouse has stopped paying the debt. In the case of bankruptcy, you may be the only person that the creditor can attempt to collect the debt from.

When a Business Owner Lowers Their Income During DivorceA spouse who owns a business is capable of manipulating their income during a divorce. Reporting a lower income means that they may not have to pay as much towards child support or spousal maintenance. A business owner may intentionally lower their income leading up to the divorce through methods such as:

  • Deferred compensation
  • Putting more of their revenue towards business expenses
  • Delaying customer payments until after the divorce

If you believe your spouse’s reported income is unusually low, you need to investigate their business and income records to see where their money is going. It is important to act on your suspicions during your divorce.

Recent Case

In the Illinois case of In re Marriage of Onishi-Chong, a woman was petitioning to revise her divorce settlement because she claimed her former husband fraudulently concealed his income. The husband is the co-owner of a financial advising company. During the divorce, the petitioner claimed that her husband’s income should be higher than what he reported, based on the following observations:

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