Divorce can be emotionally and financially exhausting. Whether a divorce is amicable or contested, it is important to keep a close eye on an individual’s finances. The closer the watch, the less likely it is that financial resources will be stretched and drained to the point of bankruptcy.
Individuals and their divorce attorneys in Illinois should carefully review all agreements prior to accepting them. This is especially important when it comes to dividing debts such as credit cards, mortgages, student loans, and unsecured loans. The Illinois Marriage and Dissolution of Marriage Act states that assets and debts should be divided equitably. However, the tax consequences and impact on a monthly budget should be carefully considered to ensure that any property, businesses, etc. doesn’t overwhelm an individual’s finances once the divorce is finalized. When it comes to debt, an individual should never agree to accept a portion of a shared debt obligation that will continue post-divorce. Should the other party declare bankruptcy post-divorce, creditors can shift full responsibility of the debt. Thus, the goal of divorce should be a clean, and complete separation of debt obligations.
To minimize post-divorce financial risk, divorcing parties should plan their budget based on the lowest possible outcome. Assets, child support, spousal maintenance, etc. should never be counted until they are awarded. Remember that even when they are awarded, there is always the possibility that the other spouse will risk contempt charges and not pay.
For this reason, it is advisable to budget as if the individual will be the sole provider for the family following the divorce. It is also wise to remember that while an individual may be awarded real property, vehicles, or businesses, individuals should consider which of these can be maintained, and which should be liquidated post-divorce. As part of this process, individuals should get their financial house in order by establishing their own credit, bank accounts, etc., prior to the completion of the divorce. The sooner an individual begins planning for “me” instead of “we,” the better.
Finally, individuals should consider what is worth fighting for, and what should be “let go.” While emotions can flare during divorce, resisting the temptation to use the law as a weapon rather than as a shield is crucial to protecting an individual’s finances. Using it as a shield can protect an individual’s assets, but using it as a weapon can drain them quickly. For this reason, it’s best to pursue a collaborative divorce whenever possible.