Tag Archives: division of assets

What Are the Benefits of Filing for Bankruptcy Before Divorce?

Wheaton divorce attorney for bankruptcyIn many cases, finances can be a leading factor in the choice to get a divorce. Married couples might be faced with difficult financial challenges, such as the expenses related to serious health problems or the loss of income resulting from unemployment. If a marriage was already unsteady, or even if it was seemingly going well, disagreements over finances can often be the catalyst for the breakdown of the relationship. Depending on your financial situation as a married couple, you might be considering both divorce and bankruptcy. Since both of these are major life events and significant legal decisions, careful thought must be given to them, and the appropriate time must be chosen to proceed with each.

Reasons to File for Bankruptcy Before Divorce

If you and your spouse are on the same page about your finances, and you share the majority of the debt, filing a joint bankruptcy before beginning the divorce process might be the right move for you. Here are some reasons why you may choose this option:

  • Affordability—The cost of a joint bankruptcy filing and an individual bankruptcy filing are the same. If you two decide to file for bankruptcy separately when you are divorced, the process will be twice as expensive.

  • Paving the Way for a Smoother Divorce—There is a lot of overlap between bankruptcy and divorce proceedings, primarily because they both require an in-depth review of finances. If you plan on filing for Chapter 7 bankruptcy, which can usually be finished in six months or less, this may allow you to resolve the majority of your debt-related issues, making the division of property much simpler.

  • The Possibility of Second Chances—Once you and your spouse receive the debt relief you need, you may realize that debt-related stress was one of the primary causes of marital discord. In that sense, by filing for bankruptcy first, you might be giving your marriage a second chance by granting yourselves extra time, including moments without the stress of crushing debt.

What About Bankruptcy After Divorce?

Overall, there are not as many benefits to filing for bankruptcy after you have completed your divorce. In general, when bankruptcy is filed after a divorce, it is in response to financial issues that occur as a result of the divorce itself. If one spouse is put at a financial disadvantage due to the divorce settlement, they may struggle to meet their needs while making any required support payment and addressing ongoing debts. In these cases, bankruptcy may be necessary to allow a person to discharge debts and receive a fresh start.

Can I File for Bankruptcy During Divorce?

In many cases, if one spouse files for bankruptcy during a divorce proceeding, they are looking to delay the divorce. This is because a bankruptcy causes an automatic stay of all state proceedings, including divorce, essentially freezing any developments on those cases until the bankruptcy is resolved. During your divorce, it is best to communicate with your spouse about your finances and make sure a potential bankruptcy filing will not cause problems during the divorce process.

The Limitations of Bankruptcy

Fortunately, bankruptcy does not put many of the most important terms agreed to through a divorce decree in jeopardy. In particular, obligations to pay child support or spousal maintenance cannot be discharged through bankruptcy. In addition, bankruptcy cannot discharge most tax bills, student loan debt, and some fees resulting from criminal penalties.

Contact a Wheaton, IL Divorce Lawyer

If you and your spouse are facing financial difficulties that are putting stress on your marriage, consider reaching out to a DuPage County bankruptcy and divorce attorney who has the experience and background to provide you with sound advice. Call the Andrew Cores Family Law Group Divorce at 630-871-1002 for a free consultation to discuss your options.

Sources:

https://cdn.ymaws.com/www.dcba.org/resource/resmgr/bankruptcy/1.24.19_bankruptcy_law_hando.pdf

https://www.womansdivorce.com/divorce-and-bankruptcy.html

Are There Benefits to Getting a Civil Union Instead of a Marriage?

Wheaton family law attorney for civil unionsIn 2011, Illinois passed into law the Religious Freedom Protection and Civil Union Act. This law enabled both same-sex and opposite-sex couples the freedom to enter into a civil union that would give them the same legal rights in Illinois as those provided by marriage. With the new term “civil union” meant to be a substitute for “domestic partnership,” all prior domestic partnerships registered would be honored, but any future similar relationships would be referred to as civil unions.

While civil unions in Illinois were initially meant to help same-sex couples achieve similar legal rights to married couples, these legal partnerships may now be pursued for other reasons. After the Supreme Court legalized same-sex marriage throughout the United States in 2015, most states converted all domestic partnerships and civil unions to marriages; however, Illinois is one of the few states that kept civil unions despite this legalization. Now that all couples, regardless of sex, can get married, why would anyone choose a civil union instead of a marriage?

Benefits of Civil Unions

Since same-sex marriage is legal across the nation, fewer and fewer people are getting civil unions. However, since civil unions are open to both same-sex and opposite-sex couples, some people are still choosing civil unions over marriages in order to demonstrate their commitment to their romantic partners. Among the benefits of civil unions are:

  • Same Rights in Illinois as Marriage—Overall, civil unions grant partners the same rights and legal protections as married couples in Illinois. However, civil unions are not recognized by federal law. The state rights with civil unions allowed for in Illinois include the following:

    • Equitable division assets and debts upon dissolution—Civil unions can be dissolved in much the same way as married couples can get a divorce. If such dissolution takes place, all property, assets, and debts can be divided equitably between the two partners.

    • Parenting time and parental responsibilities—This is treated the same in Illinois for those in a civil union as it is for those in a marriage, including determining how parents will share custody of the children from the civil union, when children will spend time with each parent, etc.

    • Health insurance coverage—Just as one spouse in a marriage can get health insurance coverage through his/her employer for his/her spouse, so can most partners in civil unions, depending on the employer.

  • Psychological Well-Being—Entering into a civil union can provide emotional benefits for partners. They might be happy to show commitment to one another by entering into such an agreement, but they will not feel restrained by the traditional label of “marriage.” In some cases, couples may prefer to avoid all of the usual trappings of a marriage, such as the wedding planning, the ceremony, and all other major activities that are expected of most married couples.

  • Possible Tax Benefits—One reason a couple may choose a civil union instead of a marriage is the potential tax advantages. While they will have essentially the same rights as a married couple in the state of Illinois, since the federal government does not recognize civil unions in the same way as marriages, the couple in the civil union might be able to avoid the marriage tax penalty. They will be able to pool their income throughout the year without being penalized come tax time by being taxed at a higher income bracket. However, this tax exclusion also means that the couple would not qualify for many federal benefits that married couples can receive.

Contact a Wheaton, IL Civil Union Attorney

If you are thinking about a civil union in Illinois instead of a marriage, consider giving a DuPage County domestic partnership lawyer a call at 630-871-1002 for a free consultation. With the guidance of the knowledgeable team at Andrew Cores Family Law Group, you will fully understand the benefits and drawbacks of a civil union. We will clearly explain all your present and future options, including addressing cohabitation agreements or separation agreements.

Sources:

https://www.forbes.com/sites/beltway/2014/06/05/are-domestic-partnerships-a-way-for-heterosexual-couples-to-avoid-the-marriage-tax-penalty/#476ad2fa4d43

https://www.thebalance.com/domestic-partnerships-vs-marriage-what-s-more-financially-beneficial-4172622

Who Is Responsible for Marital Debt in an Illinois Divorce?

shutterstock_562619533Many couples fight about finances throughout the course of their marriage. Money issues and especially debt can wreak havoc on a marriage, and in many cases, financial concerns can be a significant factor in the decision to get a divorce. Sometimes, one spouse will rack up huge amounts of credit card debt without the other spouse even knowing. Divorcing couples may wonder what will happen if one or both spouses have incurred a large amount of debt. Illinois divorce laws allow for equitable distribution of marital property, and this includes the division of debts. However, exactly how marital debt is to be divided depends on each situation, since every divorce is unique.

Marital Assets and Debts

Marital debt refers to any debts that a couple accumulates while they are married. These debts may include a mortgage, credit cards, vehicle loans, and student loans. During divorce, marital debts will be divided between the spouses according to Illinois’ equitable distribution laws. Credit cards, even if they are only in one spouse’s name, are still considered marital debt that the court will divide.

The court will review several factors to determine which spouse should be responsible for certain debts. For example, one spouse may have been the primary “breadwinner” of the family, and if they earn a higher salary, they may be better able to pay debts. On the other hand, if one spouse has been a stay-at-home parent for many years, they may have a lower income-earning potential after the divorce, and large amounts of debt could be financially crippling for them.
In general, marital debt is subject to equitable division, just like assets. In order to be as “equitable” as possible, one spouse may take on more of the marital debt, but in return, they may receive more marital assets to make up the difference. However, even if a portion of the debt is assigned to one spouse, they may choose not to make payments on it. Creditors are not legally obligated to follow a judge’s orders in a divorce case, and they may begin the collections process against either spouse. This means one spouse can be held responsible for any jointly held debt, such as a loan or credit card that they co-signed with the other spouse. Interest and penalties may apply to this debt as well. In order to avoid the possibility of one spouse being held responsible for the other’s debts, spouses should ensure that one spouse is removed from any joint accounts.

Taking Responsibility

Ideally, with the help of their respective attorneys or through mediation, divorcing spouses can work out an agreement on how to divide their marital debt. Options may include continuing to share the debt or dividing the debts so each partner takes responsibility for their own debts. In these cases, the spouses will not need to come up with a large sum of money to pay off the debts immediately. However, this can also be somewhat risky, since a person’s credit score may be negatively affected if the other party decides not to or is unable to pay off his or her share of the debts. Ultimately, the best option is to simply pay off any outstanding debts prior to completing the divorce. This method may be challenging, but it provides benefits in the long run by allowing both parties to start their new lives debt-free.

Contact a Wheaton, IL Division of Marital Debt Attorney

Amassing a large amount of debt can weigh heavily on someone, especially during a divorce. In Illinois, marital debt is considered marital property and therefore subject to division. If you are concerned about what will happen to you and your spouse’s debt post-divorce, a knowledgeable DuPage County divorce lawyer at the Andrew Cores Family Law Group will advise you on the best way to reach a positive resolution. To schedule a free consultation, call 630-871-1002 today.

Sources:

http://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=075000050K503