Unfortunately, divorce and bankruptcy seem to go hand-in-hand for some people.
This is often due to the financial stresses brought on when a marriage ends. In this article, you'll find out why the two often occur in tandem, what the impact can be, and whether you should file before or after your divorce.
It's no secret that divorce is an overwhelming stressful event in most people's lives. Besides lawyer and court costs, you and your spouse will probably be expected to cover the expenses of two households rather than just one. And, if one spouse must now find a new job, child care costs may come into play.
Divorce and bankruptcy statistics:
If your spouse starts bankruptcy proceedings before the judge finalizes your divorce, you might want to think about jointly filing for bankruptcy, especially if the majority of your debt obligations are in both your names. Because a creditor is not considered a party to a divorce agreement, you will still be responsible for the joint debts, even if your husband is the only one declaring bankruptcy.
If you jointly file for bankruptcy before your divorce, you'll be able to avoid many of the headaches involved in negotiating the division of assets and debts because most of this will have been settled by the bankruptcy proceedings. Also, a couple can save a significant amount of money in legal fees if both spouses file for bankruptcy together, as opposed to filing separately after divorce.
It's important to note that a joint bankruptcy filing is typically not available to divorced couples, even if much of their debts are held jointly. For this reason, if you are contemplating bankruptcy and haven't yet filed for a divorce, you should consider consulting with a bankruptcy lawyer before dissolving your marriage.
So, how could bankruptcy potentially help struggling divorcees?
Because of the possibility of one spouse being held responsible for debts which were assigned to the other spouse during divorce, it's important to contact your ex-spouse if you're considering a bankruptcy filing.
If you saw your income decrease after the terms of your divorce were settled, you may be worried about keeping up with support payments as well as your mortgage/rent and regular bills. But the place to modify the terms of your divorce is probably in the divorce court, not the bankruptcy court.
The following debts are not dischargeable in bankruptcy, meaning that filing bankruptcy will not likely relieve you of your responsibility to pay:
If you need help in resolving any of the above debts, don't despair: bankruptcy may still offer you relief by possibly excusing you from other debts so you have enough money to cover your support or maintenance payments.
Below are more articles to help you get your finances under control after your divorce: