Law Offices of Jonathan Gladstone
Free Consultations 410-777-8228
Effective Representation for Complex Issues

3 things to know about going through divorce and bankruptcy

Bankruptcy and divorce sometimes come hand-in-hand. Imagine how long you've been fighting with your husband over your debts. Now, you have to split them. You know that it was his bad choices that put you in debt, yet a divorce could mean you have to pay for some of those debts yourself. Here are a few facts about bankruptcy and divorce to consider.

1. Bankruptcy is a cause of divorce

It's no surprise that financial stress can lead to divorce. When the economy is particularly bad, it's common to see an increase in bankruptcies alongside an increase in divorces, although not everyone in bankruptcy files for divorce and not every divorce involves bankruptcy.

If your marriage struggles because of debt, there are solutions other than a divorce that could help. Repayment plans, consolidation loans and having your attorney help you negotiate with creditors could all relieve some of the strain. If bankruptcy is the only option, it can mean divorce for some. If that's the case, should you file before or after divorce?

Filing after divorce might seem like you can wipe out all the debt you accrue, but remember that if the other person's name is on the debt, the creditor can still seek out payments from them, and the court can hold you responsible for any debt assigned to you in your divorce settlement.

2. You could go through bankruptcy before divorce

The first and most obvious answer is to go through a bankruptcy together before divorce, so the debts no longer exist. This can eliminate some of the issues related to your divorce and give you a clean financial start when you're living on your own. The problem with going through a bankruptcy together is that your credit will suffer significant damage, and that may make it harder to buy a home, rent an apartment or get credit.

If the debts are in his name alone, suggest that he goes through bankruptcy before divorce, so there's no question that they're not your debts. Your credit won't suffer from his bankruptcy if he does it on his own, making it a better situation for you. If debts are in both of your names, suggest signing them over to his name alone or paying off any shared debts together before going through divorce.

3. Filing together is cheaper and less time consuming

As with most things financial and marital, when you work together with your partner to resolve an issue, it is faster and cheaper. Filing for bankruptcy together means you pay only one filing fee and have one legal fee. You attend hearings together and have all documents submitted only one time together. When it comes to divorce, the debts are taken care of already, making the divorce easier and less costly, too. Exemptions for bankruptcy double when a couple files together, which is another benefit of doing so before getting a divorce.

When you're not sure what the right path is, a legal professional can help you decide on the kind of bankruptcy or repayment plans that work for your situation. Whether you do it with your spouse or on your own, knowing all the rules and regulations benefits you.

No Comments

Leave a comment
Comment Information