Guide to Bankruptcy and Divorce
If you suspect that you and your spouse are on the verge of divorcing and you both owe a significant amount of money, it may be a smart idea to file for bankruptcy before you begin the process of divorcing. This will make it much easier for you to move forward with your divorce because it will allow you to get rid of some of your debt and clear the way for a fresh start. If you are able to file for bankruptcy, you will be in a better position to determine how to deal with the debts that remain between the two of you. If your ex later files for bankruptcy, you will be safe because you will have taken care of your debts prior to the divorce.
The process by which it operates is rather straightforward. Upon filing for bankruptcy, either one or both of the spouses’ joint assets will become part of the estate, which will then be used to pay off the debts incurred during their marriage. The fact that you have been granted an automatic stay means that your creditors will no longer be able to harass you for money. It’s important to remember that this stay will not prohibit you from receiving spouse or child support from your former partner. In the following step, the bankruptcy court will determine which of your jointly held assets will be excluded from the bankruptcy, meaning that it will not be liquidated in order to pay off your obligations. After then, the property can be divided between you and your ex-spouse by the divorce tribunal.
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It is likely that you will be dealing with extremely intricate issues if you are attempting to negotiate property settlements while still going through the bankruptcy process. Some of the debts that may be associated with a property settlement may not be discharged through the bankruptcy process, and you will be required to make payments on these debts. These debts, on the other hand, can be wiped out if you can demonstrate that you are unable to pay the debt while also caring for yourself or your children, or that wiping away the debt will be better for you than the harm that would be done to the persons who you owe if you do not pay the amount. It follows from this that if you believe your spouse would contemplate filing for bankruptcy after the divorce is finalized, you must ensure that your financial affairs are in order so that you are not burdened with additional debts.
Author: Simeon Bala
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