Divorce and Bankruptcy Resolve Marital Debt
All too often when a couple files for a divorce the financial situation becomes disastrous. Sometimes both husband and wife are placed in a financial hardship, other times it is only one spouse. In marriage the financial decisions and issues involve one household, and often times two incomes. However, in a divorce all of a sudden the one household becomes two and the income is now split. Factor in child support, perhaps alimony, division of household goods, splitting retirement accounts, etc. Who will pay the mortgage? Should the house be sold? Certainly a married couple who are struggling financially while living together will have even tougher financial woes after a divorce.
In today’s present economy the situation is even worse for a divorcing couple. The failing real estate market has drained the equity from the marital residence, leaving many couples upside down in their home. Now if the couple divorces they face foreclosure and a deficiency judgment.
You Can File for Bankruptcy While Pending Divorce, Seek Wise Legal Counsel From an Attorney at Law
Not only can you seek a divorce and bankruptcy at the same time, you may be forced to do so. This decision involves careful planning with an experienced attorney. There are several options to consider. 1) the couple takes chapter 7 bankruptcy before filing for divorce; 2) the couple takes chapter 13 bankruptcy before filing the divorce, and decides who will make the chapter 13 plan payments after the divorce; 3) file and finalize the divorce and one (1) spouse proceeds to either chapter 7 or chapter 13 bankruptcy.
There are issues that can complicate the divorce and bankruptcy
Keep in ind that although you can file and proceed with both divorce and bankruptcy at the same time, there are some issues which can complicate the matter. First, if you are in a pending bankruptcy, the bankruptcy trustee holds an interest in the property of the marital estate, therefore, your attorney will need to file a motion to lift the automatic stay and obtain the bankruptcy court’s permission to proceed with the divorce. You may not be allowed to divide the property of the marriage without going back to the bankruptcy court for approval.
Another complicating issue is the fact that if debts are assigned in the divorce action then you may not be able to discharge those debts in bankruptcy because they will be considered domestic obligations.
Retain an Attorney Experienced in Both Bankruptcy and Divorce
So if you are considering divorce you should seek the advice and counsel of an attorney who is experienced in both divorce and bankruptcy, and carefully plan to avoid disaster. With careful planning and seasoned legal representation you can obtain a fresh start in both your personal life as well as your financial life. If you have minor children you should consider this course of action even more carefully, so that you will have better financial resources for your children. Keep in mind that there are certain qualifications that must be met prior to filing bankruptcy either chapter 7 or chapter 13. If you are going through or are contemplating a divorce contact (Call (423-899-0131 or email) a lawyer at Purple Law Firm in Chattanooga, Tennessee to discuss filing bankruptcy and divorce at the same time.