Surviving Finanically After Divorce in Chicago

Divorce can take a financial toll on any family that goes through it. Post-divorce, families are essentially required to run two households on the same amount of income with which they used to only run one household. So, logically, it makes sense that expenses and spending would be different post-divorce. This is why it is so important to have a good financial plan and professionals involved who can assist you so that you can plan for the future post-divorce.

Create a Financial Plan

Commonly, people who are divorcing see an increase in debt, and it is necessary to do an overhaul of your financial situation and financial health. Credit scores can be impacted. Folks who divorce while trying to sell a marital residence oftentimes cannot obtain financing right away to be able to purchase a new residence, so they find themselves renting, which is more expensive oftentimes than home ownership.

Divorced parties with children may be opting to keep the children within their same school district despite moving, which can often be expensive as well. Children often require additional belongings at both homes, which is an increased expense. Someone who has had little or no income for the past several years may find themselves in a position where they have to try and rent a home or apartment, which can be difficult when there is no income history. A cosigner may be necessary, or, working with an attorney and a mortgage broker is necessary to find out what income requirements there are to qualify for a purchase or a lease on a new residence. The common theme in all of the above scenarios is that they require planning in advance and foresight into what the future may hold.

Here are some tips that may assist you when divorcing and creating a financial plan for your future post-divorce.

Ask the correct questions.

It is imperative that your divorce attorney knows what your thoughts are for the future, especially when it comes to employment and your living situation. If you are someone who has historically not worked, it is best to consult your attorney before becoming employed and to formulate a plan regarding what types of employment would be most cost-effective for you, taking into consideration spousal support, child support, daycare expenses, and other things that may have an impact on your divorce case. It is also imperative that you have a discussion with your attorney regarding your desired living situation going forward. If you have no income history, you will need to discuss ways to finance a new residence or rent a new residence. We will often have our clients speak with a mortgage broker, or apartment lease company to find out what will be required so that we can formulate a plan for moving forward.

Budget

It is imperative to speak with your attorney about budgeting and what sort of support projections you can expect to pay or receive as part of that budget. If you are the obligor, or the person paying support, you need to know the range of what you may be required to pay. If you are the obligee, or the person receiving support, you need to know what that looks like so that you can budget accordingly and plan for your financial future. Your living situation can have an impact on your underlying case, so it is important to have these conversations early on with your attorney so that it is clear what your goal is. Additionally, working with a financial planner or advisor to set long term goals in addition to a monthly budget is something we always recommend to our clients. These experts can help you plan for retirement and long-term goals, rather than just short term goals.

Run your credit report during your divorce case.

The amount of people who learn about debts they are responsible for from running their credit report is astonishing. Spouses oftentimes are not fully aware of what their spouse may have financed in their (the other spouse’s) name. Pulling a credit report helps to shed some insight into what debts you are responsible for, so that your attorney knows what to negotiate during a divorce case. Each of the three major credit bureaus make a free credit report available to you once per year; you could theoretically pull a free credit report directly from each credit bureau every three months. (It also doesn’t hurt to ask for your spouse’s credit report, specifically during the divorce discovery process, to see what debts and obligations they have, if you want to see that document). Once you are divorced, it could be too late to address debts that you did not know existed, forgot about, etc. and it is important to ensure that you know what you are going to be responsible for moving forward.

It is important that you have the correct team of professionals in place to guide you during and post-divorce to ensure that you are in good “financial health.”. Having transparent conversations with your divorce attorney, who is well-apprised of your financial situation is key to ensuring you are working towards a common goal and that your expectations are managed and met.

THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/blog/surviving-finanically-after-divorce-in-chicago/