Bankruptcy and Divorce
Bankruptcy and Divorce
If you believe that you and your partner are headed for divorce, and you
both have a lot of debt between you, it might be a good idea to decide to
file for bankruptcy before you begin to file for divorce. This will pave
the way for the divorce to proceed much more easily because it will allow
you to get rid of some of your debt and to clear the way for a clean break.
If you can file for bankruptcy, then you can have a better idea of how to
deal with the debts that do remain between the two of you. It will also
mean that if your ex files for bankruptcy later on down the road, you can
be protected because you are going to take care of your debts before the
divorce.
The way it works is rather simple. When one or both of the spouses file for
bankruptcy, all of the property that has been shared by both of them will
become a part of the estate and will then be available to pay for the
debts. This will also mean that you have been granted an automatic stay,
which means that the creditors can’t hound you for money. Remember that
this stay does not prevent you from getting spouse or child support from
your ex. The next thing that will happen is that the bankruptcy court will
decide what shared property is exempt from the bankruptcy, meaning that it
cannot be sold in order to pay for your debts. Then, the divorce court can
divide that property between you and your ex spouse.
If you are trying to negotiate property settlements, and also going through
bankruptcy, you are going to be dealing with very complicated issues. Some
of the debts that might be related to a property settlement might not be
wiped out during the bankruptcy, so you will still need to pay them.
However, these debts can be wiped out if you can show that you can’t pay
the debt and still take care or yourself or your children, or that if you
wipe out the debt it is going to be better for you than the harm that would
be done to the people that you owe by not paying it. This means that if you
think your spouse is going to consider filing for bankruptcy after the
divorce is final, you need to make sure that your finances are squared away
so that you aren’t going to be faced with any more debts.
Related Blogs
- Cash Flow Notes For Sale – Are They a Safe Investment? | Structured Settlement Broker
- Family Law – Property Settlement FAQs – Legal
- Cook County judge orders Dwyane Wade’s wife to court in divorce case
Tags: Bankruptcy And Divorce, Bankruptcy Court, Child Support, Clean Break, Creditors, Debts, Divorce Court, File Bankruptcy, File For Bankruptcy, File For Divorce, Home Directory, Money, Partner, Property Settlement, Property Settlements