Wednesday, July 27, 2016
Will Divorce Impact My Bankruptcy?
Most times money problems and divorce go hand in hand. After all, they say that money is the number one cause of divorce. This is true whether a couple is struggling or has a sizable estate. The bottom line is that money causes as many problems as it solves and for some couples the burden added to their marriage by having to deal with money issues is too much to take. In most divorce cases there is a financial settlement that one side feels is unfair or is unable to handle on their own. When someone is suddenly single again and left holding the bag for most if not all of the marital debt the answer can be to file for bankruptcy. If you are divorced or going through a divorce and also considering filing for bankruptcy, there are some special concerns to take into consideration:
A bankruptcy case filed by a consumer is done by an individual or by a married couple. If you are divorced and have filed for bankruptcy or if your ex-spouse is filing bankruptcy, be sure to watch for these things:
• Not all of the debts you were ordered to pay in the divorce are debts you can eliminate through bankruptcy. For instance, child support payments must still be made even if you file bankruptcy.
• Your ex-spouse will be considered one of your creditors when you file bankruptcy if you were ordered to make payments to them directly in your divorce. This means anything you owe your ex can be challenged by them in your bankruptcy case.
Perhaps one of the most important ways divorce and bankruptcy interact is that if you are not the one to file bankruptcy, you will be the only one left the creditors can call for repayment. If you have joint debt it will not matter to the lender that your spouse was ordered to repay it in the divorce if your ex files for bankruptcy. The lender is not a party to your divorce proceeding and any order about who is responsible for repayment of debt does not impact the creditor. In the eyes of the bank both parties are still just as responsible for the debt after the divorce as they were the day the loan papers were signed. So when your ex files bankruptcy and joint debt remains unpaid, the lender can come after you to collect. There are solutions to this problem, and to find out what you can do in this type of situation, call us for help.