Oftentimes Bankruptcy and Divorce go hand-in-hand. If you are in the process of getting divorced, it would be wise to consult a consumer attorney to analyze your financial circumstances, ensuring all of your obligations will be accounted for in the Divorce Decree/Separation Agreement, and to determine if you can handle paying them once you go back to a single income after the divorce. Bankruptcy may be a safe option once you are divorced if you find you cannot afford living on a single income.
If you will be taking the bulk of the debt once you separate and do not have the income to support it, you may consider filing for bankruptcy and starting over all together once the divorce is finalized. Here are some topics that often arise from divorce when contemplating a bankruptcy or may lead you to file for bankruptcy after your divorce:
- Who will take the marital home and pay its related expenses?
If you are getting a divorce and taking over possession of the marital home, along with taking over the related expenses, especially the mortgage(s) on the home, be sure to have your Divorce Decree state the terms of this transfer accurately.
Also, making a budget before the divorce is final will help you determine if you will be able to afford to stay in the home.
If it is determined that you can, in fact, afford to live in the home after the divorce, then make sure the proper documents are recorded on the Land Records after the transfer. This will give you a paper trial you may need to provide in your bankruptcy case later on.
- Will you be responsible for credit cards in your ex-spouses name?
If so, make sure the Divorce Decree/Separation Agreement spells out all debt you will be taking responsibility for once the divorce is final, along with the last four digits of any account numbers. Once the divorce is final, be sure to contact each company in writing and have the accounts switched into your name. Wait at least six weeks and then review your credit report(s) to ensure accurate reporting, so as not to inadvertently leave off a debt you are responsible for on your Bankruptcy petition, among other things.
- Will you be ordered to pay alimony or child support?
Keep in mind, that these particular types of “debts” are allowable deductible expenses in your Bankruptcy case; this means that they are taken into consideration when qualifying for Bankruptcy. Also, it is important to note that court-ordered Alimony and Child Support are what is known in the Bankruptcy realm as “priority debts” and cannot be discharged in most cases. (Taxes and loans involving the government are also included in the priority category.) It is vitally important to have all obligations in this category fully defined and explained in your Divorce Decree/Separation Agreement, as you will likely be fulfilling these obligations regardless of ever filing for Bankruptcy.
Filing for bankruptcy after a divorce is not the end of the world. In fact, it may be the best thing that ever happened to you, and will help you to move on and start fresh.
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