Can You File For Divorce And Bankruptcy At The Same Time? Divorce must be taking a toll on your emotions, affecting your daily life just a little more than you have imagined. Now, if you are considering filing for bankruptcy on top of it, it will definitely get on your nerves. In case you have already decided that divorce is the only best option, remember that there will be significant financial mishmash. If filing for bankruptcy has been a mutual decision, here’re certain choices that you’d like to consider along the way: 1. Filing for bankruptcy and divorce at the same time would be a significant foul-up Both are significant legal matters, and they must not be overlapped with each other. Typically, couples prefer filing for bankruptcy right before they file divorce – and this has many reasons too. Once you file for bankruptcy, irrespective of any chapters, an ‘automatic stay’ is issued. As soon as an ‘automatic stay’ is issued, the creditors are forced to stop contacting you and from freezing your properties or assets. Following this, the bankruptcy court sorts out your debts and assets to help you pay off some of it. Note* This halt remains effective throughout the bankruptcy process. Now let’s just say, you have already filed for bankruptcy, followed by immediate divorce filing – this will cause overlapping. As we all know that a major part of divorce filing and processing is parting properties between two partners, the ‘automatic stay’ makes it almost unmanageable for the family court to make any move. With bankruptcy filed alongside, the divorce is outstretched than necessary, making things more stressful emotionally as well as physically for you and your loved ones. 2. What you should file first must be determined by your current financial and marital situations Although you’re strictly advised not to file for bankruptcy and divorce at the same time, you can yet decide which process you want to go with first. While the final decision is entirely yours, there are still some factors to consider before deciding on which to file first. If you and your partner are on cordial terms, filing for bankruptcy would be a smart move. Filing for bankruptcy lets you and your spouse split the filing and attorney fees while protecting both from compensating a joint liability – which usually proves advantageous if you both own property together. Depending on which state you officially belong in, some states practice offering double exemptions on properties upon filing joint bankruptcy. To exemplify, if your house is exempt for up to $50,000 in a bankruptcy, certain jurisdictions permit a double exemption, sanctioning your home for exempt up to $100,000. Because exemption laws differ from one state or district to another, you are always advised to consult with an experienced bankruptcy attorney in your district or state just to learn your options. To file bankruptcy first as well makes the distribution of properties in divorce easy, for they are usually split-up in the bankruptcy process, even if a change is possible in some instances.
If you and your partner opt for chapter 7, this will count your joint income, putting you both over the income brink to file. If your respective incomes are falling below the threshold, you might want to seek more options to file divorce before filing for bankruptcy. 3. Chapter 7 yet makes an ideal choice if you wanted a quick divorce One of many benefits of filing for Chapter 7 bankruptcy is that it has a timelines process. Chapter 7 bankruptcy removes all your dischargeable liabilities typically in four to six months, which subsequently allows you to proceed with your divorce filing process sooner, in case you opt to file for bankruptcy first. On the other hand, chapter 13, bankruptcy arranges a 3-to-5-year payment plan rather than completely discharging the debt. And, this can also possibly outstretch your divorce process. If you have already filed for chapter 13 bankruptcy and are also deciding to file divorce alongside your repayment plan – did you know you could still opt for cancellation or restructuring your bankruptcy plan? As you cancel, you give your consent to stopping the mutually decided repayment plan; but, all the liabilities would still be lying on your court. Now, if you opt for restructuring the repayment plan, it will split the plan into a couple of instances – while one will be for you and the other will be for your partner. This will allow you to deal with the bankruptcy respectively. However, often such choices have proven to be more complex if not professionally taken care of, and also can lead to an elongated divorce case in case anything goes offcenter. This is why you are highly advised to speak with an experienced bankruptcy attorney to learn about the best possible result for your situation. 4. Not all of your debts will be included in bankruptcy If you’re considering the route of discharging all of your debts in chapter 7, you should know that not all your debts are eligible to be included in this chapter of bankruptcy. Debts that are already supposed and considered “nondischargeable” can never be eliminated in this bankruptcy process of Chapter 7, which means you will still be responsible for repaying them. Followings are the some common forms of nondischargeable debts:
Child support Alimony Penalties owed to government agencies Student loans Lawyer’s fees for child custody or support cases Court fines and/or penalties
More to these financial obligations which are absolutely non-dischargeable, there are some other forms of debts that can be completely barred from being discharged. Debts that are dischargeable in chapter 7 bankruptcy are considered a ‘privilege’ than a ‘right,’ and debtors are obliged to abide by the laws registered in the Code of Bankruptcy to support the discharge of a debt. In case the debtor falls flat to
follow these rules, the bankruptcy court might refute their request for debt discharge. The debt discharge request in Chapter 7 bankruptcy might also be denied in these following circumstances:
Fails to produce required tax documents Hides assets in an attempt to defraud the creditors Extinguishes financial records or books Commits mendacity concerning the bankruptcy case Violates the bankruptcy court order Fails to attend a compulsory credit counseling program
There are several laws concerning non-dischargeable debts; the wisest way to decide on which debts you can possibly have eliminated is by speaking with an experienced and renowned bankruptcy lawyer. They will review your case and let you know the options available. Recovery Law Group – an exceptionally experienced and renowned consumer protection law firm – makes an ideal choice here to review your case. You can call or write to them for a quick and free bankruptcy/divorce consultation.