Bankruptcy and Divorce
Financial problems are often a complication that may have added to the stressful causes of a divorce. Divorcing couples who are deeply in debt may wonder whether they should file for bankruptcy before or after they dissolve their marriage. There is no “one size fits all” answer because there are so many factors that need to go into the decision. There are advantages and disadvantages regardless of when you decide to file for bankruptcy. However, it is best to understand your options by discussing the details of your case with a qualified divorce/bankruptcy attorney prior to making any decisions.
Filing during a Divorce
Filing for bankruptcy in the middle of a divorce can be tricky. When one spouse files for bankruptcy alone, the result could be that only his or her portion of the debts are discharged. This could leave the other spouse with quite a bit of debt to resolve. Furthermore, under divorce law you may still be responsible for your share of the debt to your spouse. For this reason, it is best to come to a bankruptcy decision jointly, whenever possible. If you are having financial difficulties it is imperative that you let your divorce attorney know immediately, as it could affect the decisions of the divorce.
When a bankruptcy is filed during a divorce, it puts an automatic stay, or hold, on the division of property. It does not impact the issues of child support or custody. The hold will lengthen the time it takes to obtain a divorce, since the financial debt matters must first be sorted out. This could take considerable time, in some instances. However, it may be beneficial to resolve debt problems rather than allowing them to have a negative influence on your long-term money situation.
Bankruptcy after Divorce
If you wait until your divorce is final to file for bankruptcy, you could still run into trouble. When a former spouse files bankruptcy after the divorce, creditors do not have to follow the divorce decree where debts were distributed. Instead, they will pursue collection of the debt with the spouse who did not file bankruptcy. Therefore, it could be beneficial to deal with the bankruptcy before finalizing the dissolution of marriage.
Since everyone’s marital and financial situations are unique, there is not one correct solution. As with most of the divorce decisions, the choice to file bankruptcy is filled with advantages and disadvantages. There are many important consequences of bankruptcy that need to be weighed before an informed decision can be made. An experienced divorce attorney is essential, especially in cases where there is a potential for bankruptcy.
As you divorce you are likely looking forward to having a fresh start. You want to put your divorce and all of its baggage behind you. If you are struggling with debt before the divorce, it will probably still haunt you afterwards unless you take the steps necessary to resolve it. The decision to file bankruptcy is one of the most important choices that can be made as part of the divorce. However, it can be a new beginning, which would not be possible otherwise. Trust that your divorce and bankruptcy attorney will assist you in getting the new beginning you deserve. If you are about to go through a difficult divorce, count on the experienced legal team at our firm to assist you during this difficult time. Contact the Tampa divorce attorneys and bankruptcy lawyers at All Family Law Group, P.A. in Tampa Bay at 813-816-2232 for a consultation at no charge or email us.
By Lynette Silon-Laguna Google+