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DuPage County divorce attorney asset division

Financial struggles are cited as one of the most common causes of divorce. Heavy debt and being unable to pay the bills is stressful, which can damage the couple’s relationship. Monetary troubles can also highlight the spouses’ conflicting spending and saving habits. Bankruptcy is one way that a couple may try to resolve their debts and get a clean start, but it may not be enough to save a marriage that has crumbled under the stress. If you are considering both divorce and bankruptcy, you should understand how the two could affect each other. 

Should Divorce or Bankruptcy Come First?

It would be chaotic to file for divorce and bankruptcy at the same time. Not only would you be juggling two major court cases, but most of your marital assets would be tied up in the bankruptcy. Which you file for first may depend on these factors:

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Does Your Spouse Share Your Business Debt in Divorce?The division of properties and debts is one of the main tasks when making a divorce agreement. You may know that a business that one of you owns can be marital property if it was started during your marriage, increased in value during your marriage, or mingled with your personal assets. When a business is a marital property, does that mean that the business’s debts are also marital debts? There are situations in which a business debt could be divided between spouses in a divorce:

  1. Your Spouse Cosigned on a Loan: Your spouse clearly shares liability for a business loan if they agreed to do so by cosigning the loan agreement. Your spouse may cosign if they are a partner in your business or if you need to back the loan with your personal finances in order to qualify. As long as your spouse’s name is on the loan contract, the lender will consider them liable for the debt, regardless of whether you decide to divorce.
  2. Your Business Does Not Have Limited Liability: The sole proprietor or general partner of a business is personally liable for their business’s debts unless they form the business into a corporation or limited liability company (LLC). Business debts that you are personally liable for will qualify as marital debts in a divorce. You may be expected to take responsibility for paying your business’s debt, but it will be included when calculating how to fairly divide all of your marital debts.
  3. You Used Your Business to Receive a Loan for Personal Expenses: A business owner may use their marital assets as collateral to get a business loan. The reverse can also work if you use business assets as collateral for a loan that is meant for personal expenses. For instance, you could use real estate that your business owns as collateral in order to receive a loan to pay for a home renovation project. Though the loan may appear to be a business debt, you can argue that your spouse should share responsibility for paying it because the loan was invested into a marital property.

Contact a DuPage County Divorce Attorney

Whenever you mix business and personal finances, it is important to keep track of where assets came from and how they are used. Otherwise, your spouse can claim ownership rights to business assets or avoid liability for shared debts. A Naperville, Illinois, divorce lawyer at Calabrese Associates, P.C., will work with you to protect your business interests. Schedule a consultation by calling 630-393-3111.

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Should You Pay Off Your Marital Debts During Divorce?Figuring out how you will divide your marital debt is one of the many important tasks you must complete during your divorce. As part of your divorce agreement, you can determine which debts each of you will be responsible for repaying. You also have the option of repaying your debts during or even before your divorce. Getting rid of the debt would relieve a financial burden on your life after divorce. However, it is possible that repaying your debts is not feasible or the best choice in your situation. There are several questions you should answer before deciding whether to immediately repay a debt.

Is It a Marital Debt?

The simple definition of marital debt is one that you entered into while you were married, but other factors can determine who is responsible for a debt, such as:

  • Whose name is on the loan agreement
  • Who has benefited from the loan

If you and your spouse are equally liable for the debt, paying it off immediately could be a prudent decision. You should not repay your spouse’s separate debts before you start your divorce negotiations. Instead, you can save it as a bargaining chip by offering to help repay the debt in exchange for marital assets.

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Financial Infidelity Can Destroy Trust in MarriagePeople usually associate infidelity in a marriage with having a romantic affair. There are other ways that spouses can lie to or hide things from each other that are just as hurtful. One way that is receiving increased attention is financial infidelity, which is when a spouse has secret financial accounts or debts. Financial infidelity is not only a betrayal of trust, but it also puts the unaware spouse at financial risk. In some cases, the betrayal may be serious enough that the spouses choose to divorce.

Understanding Financial Infidelity

Digital technology makes it easy for someone to create secret accounts or conduct financial activities without their spouse knowing. The person can control everything remotely and hide records. As with most lies, the truth comes to light usually when the lying spouse feels compelled to confess or the unaware spouse discovers evidence of the secret finances. There are several reasons why a spouse may have secret assets or debts:

  • The assets could be paying for a romantic affair;
  • The spouse may have an addiction, such as gambling, shopping, or substance abuse;
  • The spouse may have obtained the money illegally; or
  • The spouse may be siphoning away money because they are preparing to leave the marriage.

Regardless of the reason, financial infidelity affects both spouses because they are both liable for debts accumulated. Even if there are no debts, the money diverted to the secret account could have been used to pay for marital expenses, child expenses, or retirement savings.

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How Sexual Harassment Allegations Against Your Spouse May Affect Your DivorceIn the past couple of months, the media has increased its attention towards sexual harassment allegations brought against male celebrities. Careers – and presumably marriages – have been ruined. However, most sexual harassment cases involve people who are not famous. If you believe the claims made against your spouse, it may be enough reason for you to want a divorce. You may feel:

  • Shocked that your spouse is capable of such action; and
  • Hurt that your spouse is seeking the admiration of someone else.

Because Illinois is a no-fault divorce state, you cannot cite the sexual harassment as a reason for your divorce or expected to be compensated for it. However, your spouse’s involvement in a sexual harassment case can still affect your divorce.

Lawsuits and Debts

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