Category Archives: Divorce Finances

Repairing and Building Your Credit After DivorceHaving good credit helps when you are responsible for supporting yourself after a divorce. It gives you the option of borrowing money to finance your immediate needs, such as purchasing a new home. Bad credit history or no credit history are obstacles to your financial stability but can be overcome with proper planning. Two of your goals during your divorce should be to protect or repair your credit and to work on building your individual credit.

Existing Credit

You need a current credit report to understand your financial situation, which you can purchase from a major credit bureau. Your current credit rating is likely based on:

  • Marital debts;
  • Business debts; and
  • Debts from before your marriage. 

Equitably dividing your marital debts is part of the divorce process. Marital debts are personal debts created during the marriage. With business debts, both spouses may be liable if they co-signed on the debt agreement or the business is not a limited liability company. Debts that predate a marriage are not shared during the divorce unless the spouse agreed to assume liability for the debt.

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Affording a New House as a Single ParentWhen parents divorce, at least one of them must find a new home for them to live with their children. In some cases, both parents are searching for a home if they sell their marital home. It can be difficult to purchase a house as a single parent. You must find a home that is within your price range but still meets your family’s needs. It may also be more difficult to receive a mortgage as a single parent. To purchase a home, you will need to plan ahead and use the resources available from your divorce agreement.

Assess Your Situation

Before hitting the housing market, you must identify what you need and what you can afford. Your needs may depend on how many children you have and their ages. Young children of the same gender may be fine with sharing a room, but older children need more privacy and space. Your housing expenses are a major component of your budget after divorce. Besides your job income and living expenses, you must consider divorce-related assets and expenses, such as:

It may be unwise to devote all of your available assets toward purchasing a home if you can find an acceptable home at a lower cost.

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Differentiating Between Individual and Marital Debts in DivorceDividing debts from your marriage can be one of the trickier parts of a divorce agreement. As an equitable division state, Illinois requires divorcees to split their debts in a way that is fair to both parties. Giving each spouse half of the debt may not be an equitable agreement, and a divorce court has the right to divide debt in a way that it deems to be equitable. For instance, a spouse with greater assets after the divorce may also receive a greater share of the debt. Divorcees also must consider whether a debt belongs to an individual or both parties.

Individual Debts

A debt belongs to an individual spouse if the creditor holds only that spouse liable for repaying the debt. You can usually identify an individual debt if:

  • It was created before you were married or after you were legally separated; or
  • The debt contract lists only one person’s name as the owner.

Student loans and individual credit cards are common sources of non-marital debt, as long as they follow the above criteria. You likely want to avoid agreeing to pay for a debt that you are not legally obligated to pay. If one spouse has significantly greater individual debt, he or she may receive a greater share of the marital properties to compensate.

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Divorcees Prefer Silence When Facing Financial ProblemsPeople who have filed for divorce are less likely to talk to others about their personal finances, according to a recent CNBC survey. Amongst the survey respondents who were divorced, 56 percent said that they rarely speak with family members about their money. Only 27 percent of all the survey respondents gave the same answer. There is nothing wrong with financial discretion when talking to family members. However, divorcees put themselves at risk if they do not talk to anyone about their financial troubles.

Reason for Silence

People dislike sharing their financial concerns with friends and family because they may be embarrassed about their situation. Unfortunately, divorce causes financial trouble for some people because:

  • They are primarily relying on their individual incomes to support themselves;
  • They lost some of their marital properties as part of the divorce;
  • They may have new expenses, including purchasing or renting their own homes; and
  • They may be required to pay child support and spousal maintenance.

It takes humility to admit that you need help despite worrying whether people will think less of you because you are struggling to pay bills and control your debt. Even if you are not in financial danger, you may be embarrassed to show that you cannot afford the same lifestyle as when you were married.

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Create Your Own Savings Before Filing for DivorceBeing able to afford your divorce may be one of your largest obstacles when you are considering whether to end your marriage. You will need enough money to hire a divorce attorney and support yourself when the process starts. You cannot rely on being able to immediately access the money in your marital accounts, which may be frozen. If you are financially depending on your spouse, it could take months to establish spousal maintenance payments. In order to afford a divorce, you can start saving money while married and consider other sources of financial support.

Emergency Fund

You need a source of money that is independent of your marital bank account. It could be an individual savings account or cash, as long as it is secure and easily accessible. Your savings should come from individual sources of income because taking the money from a joint account will draw suspicion from your spouse. The money could be:

  • A portion of your regular wages that you divert into the account during every pay period;
  • Gifts that you receive from family and friends; or
  • Earnings that you receive from doing various jobs.

You should use this money only for divorce-related expenses and your basic living needs after filing for divorce. While an emergency fund can stay secret during your marriage, you must disclose it during your divorce because the money could be marital property. Keep a record of where the money in the account came from. Your spouse may have an emotional reaction to learning about your emergency fund. Expect that he or she will be upset with you and demand that you explain.

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Goostree Law Group

Goostree Law Group

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

 630-584-4800

 1770 Park Street, Suite 205
Naperville IL 60563

 630-364-4046

 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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