Divorce is almost always an emotionally challenging process. Many people discover that every aspect of their lives are impacted by divorce more than they ever would have anticipated. If you and your former spouse have decided that divorce is your best option, it is likely that your finances will be affected, and sometimes, bankruptcy becomes a necessity for one or both spouses. Navigating bankruptcy can complicate the divorce process, however. The following will review some important things to consider if you have facing both bankruptcy and divorce.
Do Not Simultaneously File for Divorce and Bankruptcy
It is often best to not proceed through divorce and bankruptcy at the same time. After filing for bankruptcy, an “automatic stay” is placed on a person’s account, which prevents creditor harassment and freezes a person’s assets and property. If the two overlap, an automatic stay will be placed on a person’s assets and will make it impossible for the divorce court to divide assets.
While it is often best to not file for both bankruptcy and divorce at the same time, a person should carefully choose which process to navigate first. If a marriage ends and the former spouses are still friendly with one another, it is best to file for bankruptcy first because this allows the former partners to share costs and filing fees. If spouses no longer get along with each other, it is often a better idea to immediately divorce and then navigate the bankruptcy process afterward.
Chapter 7 is Often Best
One of the main advantages of filing for chapter 7 bankruptcy when you must also navigate a divorce is that chapter 7 bankruptcy is often capable of being resolved within three to six months. Chapter 13 bankruptcy, however, typically results in a three to five-year payment plan, which can make a person’s divorce or separation take much longer. If a person is engaged in a chapter 13 bankruptcy and decides to divorce his or her former spouse, the individual is given the option to either cancel or restructure the repayment plan.
Not All Debts are Dischargeable in Bankruptcy
If you end up pursuing chapter 7 bankruptcy, it is critical to remember that not all debts are capable of being discharged. Debts that are not dischargeable can not be forgiven as part of the bankruptcy process, which almost certainly means that you will be required to repay these debts. Some types of non-dischargeable divorce debts include alimony, child support, and associated attorney’s fees.
Speak With an Experienced Bankruptcy Lawyer
No matter the point of your life at which you file for bankruptcy, it is common to feel uncomfortable and uncertain about the process. In these situations, it is often critical to obtain the assistance of an experienced bankruptcy attorney. Attorney Jim A. Lyon has helped numerous people navigate the bankruptcy process. Contact attorney Lyon today to schedule an initial free consultation.