Four Surprising Ways Divorce Can Affect Your Finances 

 Posted on January 06, 2022 in Divorce

One of the most damaging parts of divorce is the impact it can have on a family’s finances. Even for two adults without children, splitting a household can cause enormous financial upheaval. While getting divorced does not directly affect things like your credit score or your salary, your financial situation following a divorce is likely to be affected in some surprising ways. Here are four things to watch out for.

Your Car Insurance Rates May Go Up

Just as getting married can indicate stability and lower your car insurance rates, getting divorced indicates a person with a greater risk profile, leading car insurance companies to raise premiums for divorcees. Although the difference is not likely major, factor this in as you plan your post-divorce finances.

Your Credit May Suffer Even if You Make Timely Payments

Whether debt is in your name, your spouse’s name, or both, when it comes time for divorce, creditors will still want their money. As long as a loan was taken out during a marriage and benefited the relationship, it will likely be joint debt and both parties can be given responsibility for paying it off. But beware - if your spouse is supposed to make payments on a joint credit card and does not, your credit score can suffer even if you make your share of the payments on time.

You May Lose Your Emergency Savings

As long as the money in a savings account was accumulated during a marriage, the balance of the account is likely divisible as marital property, even if it is only in one spouse’s name. You may have chosen to save your extra income wisely and your spouse may have spent his or hers, but that may not necessarily make a difference when it comes time to divide assets.

Your Tax Rate Might Go Up or Down

The federal government offers married couples many tax incentives. Although couples rarely pay much attention to these benefits when they are married, it can make a surprisingly large difference once the divorce is finalized. Besides potentially falling into a different income bracket, you may no longer be eligible for certain exclusions and credits. For example, only one spouse can claim a child as a dependent for tax purposes. Be aware of these changes before filing taxes to avoid expensive mistakes.

Contact an Arlington Heights Divorce Lawyer

Understanding how divorce could impact your finances is an important part of preparing for a strong financial future. To learn more about how to protect yourself financially during divorce, consider getting the help of an experienced Arlington Heights, IL divorce finance attorney at A. Traub & Associates. Schedule a confidential consultation today by calling our offices at 847-749-4182.

Source:

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075000050HPt%2E+V&ActID=2086&ChapterID=59&SeqStart=6200000&SeqEnd=8675000