Divorce, coupled with bankruptcy can pose serious problems for those involved. When a married couple who no longer wants to stay together have debts piling up and are heading for divorce, bankruptcy may be one way to sort out the financial problems. Bankruptcy has the capacity to be filed by just one spouse, or jointly. The effects of bankruptcy on divorce proceedings? Abrupt at best. An automatic stay will put a stop to all activities on divorce proceedings.
Although one lawyer may seem trying in a time of stress, two lawyers may be necessary to sort the matters out, a bankruptcy attorney and a divorce lawyer to work things out between the unhappy couple. A bit of good advice to take would be to quickly find a bankruptcy lawyer to guide you through your finances, additionally to the attorney who is assisting you through your divorce. The expert guidance with alimony, child support, property settlements, and other financial issues is key when you are suffering from the stress of bankruptcy and divorce simultaneously.
If the unhappy couple owes a large deal of shared debt, filing for bankruptcy jointly is a good option. This can even simplify the divorce settlement, and filing bankruptcy jointly is cheaper. If you are a spiteful ex, filing individually for bankruptcy is one way to send the creditors after your spouse.
Then there is the issue of property that you have accrued during marriage. That's marital or community property. If you are filing jointly for bankruptcy, and your former spouse has marked some of your separate property as marital property, you should take these actions. First, you should prove what is yours is not community property. The bankruptcy court will release the exempt property, and the remaining property that you share will be part of the bankruptcy estate and therefore will be utilized for paying off debts.
After the bankruptcy court has determined which property is exempt from bankruptcy, the divorce court can dole out the property between the divorcing couple equally. The non exempt property will be sold by bankruptcy trustees (representatives) to pay off the money that you owe.
A different way to steer clear of financial loss on account of your former spouse's debt is to attach a property of your spouse as a security lien. This lien will permit you to take hold of the property and utilize it to pay off your spouse's loan if he or she is thinking of ditching and letting you pay. The property with a lien may get you less than the market price, but this is still a good way to protect yourself.
And in conclusion, you have the ability to work an indemnity clause into your divorce decree. This will help guard you from creditors who are coming after you to pay for your ex spouse's debts after the divorce. If your husband or wife files for bankruptcy, don't worry. The judge will enforce it to protect you and your finances.
- Divorce And Bankruptcy