Bankruptcy And Divorce
Divorce is one of the major life events that can amplify debt into an unmanageable situation. Many couples filing divorce also file bankruptcy, either jointly before the divorce or separately after.
Why are divorce and bankruptcy so commonly linked? A married couple typically shares their incomes and their debts, whether through joint accounts or simply joint household. Once they split, their income may fall by half, but their debts don't budge.
Divorce can also add new debts into an ex-spouse's monthly budget. Spousal maintenance, child support, housing costs and more are common after divorce. All of these can add up to more debt than one person can handle--and to bankruptcy.
If you're facing bankruptcy after a recent divorce, talk to a bankruptcy lawyer today.
Finances of Divorce
As you may have already found, divorce can be a costly endeavor. Beginning with lawyer's fees and court costs, you may also be forced into paying spousal support and/or child support and surrendering property and assets.
All of this can compound with credit card debt, mortgage debt or other "normal" debt to create an unbearable financial situation. While filing bankruptcy will not forgive you of your divorce support obligations, it may be able to wipe out other debts to make those obligations easier to meet.
Divorce & Bankruptcy: Which to File First?
Sometimes, the one-two punch of divorce and bankruptcy is inevitable. Divorcing couples know that one or both of them will need to file bankruptcy to create a truly clean slate. But which to file first?
The answer depends on a number of circumstances, most of all how well you get along with your spouse or ex. However, if possible, it may be more beneficial to file jointly while married.
First of all, only married couples are allowed to file jointly. If you are legally divorced, you will need to file separately, even if all of your debts were accrued while married. In addition, filing jointly may save money on attorney's fees and court costs, as there is only one bankruptcy case instead of two.
Also, by filing bankruptcy prior to divorce, you'll likely have a more concrete idea of your finances when deciding on them in the divorce process.
However, there is nothing wrong with filing bankruptcy after divorce, as many individuals do. If this is your situation, you'll likely want to find a bankruptcy attorney to guide you through the process.
Divorce Debts in Bankruptcy
Divorce-related debts such as alimony, child support, and even attorney and courts fees cannot be discharged in bankruptcy. However, that does not mean that you cannot file bankruptcy if you have these debts. They will simply remain once you receive your debt discharge.
If you have credit card debt, medical debt, or secured debt like a mortgage, you may be able to eliminate or reduce these debts in bankruptcy. This may create room in your budget to be able to pay debts stemming from your divorce.
Get Bankruptcy Help with a Local Attorney
Divorce and bankruptcy can both be difficult, emotional procedures. If you've gone through a divorce only to find that your financial life is in ruins, you don't have to go through the process alone. A lawyer can help you understand bankruptcy laws and answer your questions while preparing for your case.
Speak with a personal bankruptcy attorney today. Simply fill out the case review form below to connect with a bankruptcy lawyer in your area for a free, no-obligation consultation.