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The intersection of bankruptcy and divorce

1/3/2013

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bankruptcy and divorce
Divorce can be one of the toughest events in one’s life.  Even worse, divorce can leave one spouse with a mountain of debt from their ex that they simply can’t afford any longer, whether from credit cards or a mortgage. An all too common tool that a spouse will use in this case is to file for bankruptcy protection.

​Filing bankruptcy is a common outcome for people going through divorce. Further, the intersection of divorce and debt has its own nuances in the world of bankruptcy

Should I file bankruptcy before or after divorce?

​One common question is what should come first: divorce or bankruptcy? While it always depends on the circumstances of each individual, more often than not, it’s better to wrap the divorce up first. One, this is general opinion: everyone’s situation is unique and needs to be game-planned. Sometimes, our law firm is involved during the entire divorce process, whether bankruptcy is filed before or after. Second, it’s important to note that divorce is not simply “you go away”. Often, there are issues involving property division and Spousal/child support. If you are considering bankruptcy in conjunction with a divorce, it’s vitally important to consult with a bankruptcy attorney to help strategize.  Speaking of….

Bankruptcy and child support

A second common question regarding bankruptcy and divorce involves child support and alimony. Whether you receive or pay it, the new 2005 Bankruptcy Code ensures that alimony and child support payments must continue and can’t be discharged by a bankruptcy filing. Thus, if your ex should file bankruptcy, which could be a good thing for you: he/she will no longer have other debts EXCEPT the spousal/child support obligations.  He/she should be able to better afford them!

Can a separated couple file a joint bankruptcy?

A final common question asked by many couples planning a divorce, but still married is- Can we file bankruptcy together? The answer is technically ‘yes’ and is somewhat more frequent than you may expect. Filing a joint case would probably only be feasible for a joint Chapter 7, which is usually closed within a few months and does not involve monthly payments.

The Bankruptcy Code allows married couples to file one (1) “joint” bankruptcy.  So, yes, any couple that remains married can file a joint bankruptcy, which typically means less fees and costs. With that said, each attorney has to weigh the potential for conflict in a situation like this to determine whether or not he/she feels comfortable representing both spouses.  While intuitive, the more agreeable the couple is, the less potential for conflict. As always, this collision of bankruptcy and divorce can be difficult and you should always consult an attorney as soon as possible. ​

Divorced couple in a joint bankruptcy

If you and your spouse are already in a joint Chapter 13 bankruptcy then it may be necessary to file a motion to separate or deconsolidate the two cases. If this becomes necessary both parties will need to retain separate attorneys as the original renovator will be conflicted from representing either party on an individual basis.
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Contact us
  • Home
  • Firm Info
    • Contact Us >
      • Directions to Monroe office
    • Attorney Profiles >
      • Jason D. Witt
    • Fee Schedule
  • Family Law
    • Child Custody
    • Child Support
    • Divorce
    • Property Division
    • Alimony and Post-Separation Support
    • Separation Agreements
    • Domestic Violence Protective Order
  • Criminal Law
    • Traffic/DWI >
      • Traffic Tickets
      • Suspended or Revoked License
      • Driving While Impaired
    • Misdemeanors
    • Felonies
    • Expungements
  • Other Areas
    • Bankruptcy Law >
      • Personal Bankruptcy
      • Chapter 7 vs. 13
      • Bankruptcy Myths
      • NC Bankruptcy Exemptions
      • Bankruptcy Means Test
      • Bankruptcy Disclaimer
    • Debt Settlement
    • Foreclosure Defense
  • Blog