Avoiding the Divorce-to-Bankruptcy Pipeline
One of the most often-cited cause of bankruptcy is divorce. Many people will find that after the end of their marriage, they also need a fresh financial start. Some couples even have to file for bankruptcy during a divorce. How can you avoid the divorce-to-bankruptcy pipeline?
Understand True Cost of Divorce
Many people do not understand the true costs of a divorce. Between filing fees, legal fees, expert witness fees, the longer a divorce goes on, the more expensive it gets. Sometimes divorcing couples fight about the property division so fiercely that they have to sell off more and more of their assets just to pay to continue to fight.
Another often-ignored cost of divorce is the taxes. Married couples get a lot of special treatment under the tax code. Once the marriage is over, many people are surprised to see their tax refund decrease and their taxes increase.
After a divorce, even when child and spousal support have been ordered, there is less money to go around. You and your ex-spouse likely make about the same income as before the divorce, but now that income is split between two different homes.
Once you understand that even if you are awarded some form of support your total income will most likely be less in terms of real dollars after a divorce, you can make smarter budgeting decisions. This is even more important if you are the one paying support.
Make Lifestyle Adjustments
One of the hardest things to do after a divorce is to learn to live on less money. Many people fool themselves into thinking they should not have to give anything up after a divorce. However, if you want to avoid bankruptcy you will need to live within your means, even if that requires you to adjust your lifestyle.
The first two years after a divorce are often the most critical financially. During those two years you are still learning to live life without your spouse and to get by with less income. If you can come make it through paying your bills on time and without living on credit cards, chances are good you will have avoided the post-divorce bankruptcy trap.
If you are considering a divorce, or have any questions about property division, child custody, or any other family law issue, you need to talk with an experienced Geneva divorce attorney. At the Law Offices of Douglas B. Warlick & Associates, we have helped thousands of Illinois families get the answers they need throughout every step of the divorce process. Call 630-232-9700 today to schedule a consultation.