Sadly, financial stress in a relationship sometimes leads to divorce. Or, the same underlying problem that caused the financial problem is also causing a relationship problem, again leading to divorce. What if you are considering divorce and bankruptcy? What do you need to know?
Everyone’s situation is different of course, so our first advice is that you see a divorce attorney alone. Don’t go with your spouse at this point. Why? A single Corona bankruptcy attorney cannot represent two divorcing spouses in a bankruptcy case and once you have both talked to the same attorney, the attorney may be prohibited from representing either one of you under attorney ethics rules.
Bankruptcy Before Divorce
If you are considering filing bankruptcy before you get divorced, there are pros and cons. On the positive side, if both spouses are considering filing, whether together or separately, discharging all of your credit card, medical, and other debts may make the divorce easier. No debts to split up means one less thing to worry about in the divorce. But, often times both spouses do not want to file bankruptcy. If only one files bankruptcy, that does not prevent the family law court from ordering during the divorce that each spouse assume their fair share of any remaining debt. So, filing bankruptcy before divorce for just one spouse might turn out to be ineffective.
Bankruptcy After Divorce
After divorce, you are a single person, of course. Your divorce decree may order you or your spouse to pay for certain debts, to pay for child support or alimony, or to pay a property settlement. Some of these debts can be affected by a bankruptcy.
Child Support and Spousal Support
A bankruptcy case does not discharge a person’s obligation to pay child support or spousal support. In Chapter 13 bankruptcy, if the debtor owes support in arrears, generally the Chapter 13 plan must provide for the payment of any arrearages over the course of the Chapter 13 plan period (three to five years), unless the other spouse agrees to different treatment.
Property and Debt Settlements
If the divorce decree provides for a division of debts or assets that includes a future payment obligation, then the debt obligation cannot be discharged in a Chapter 7 case. But, often such debts can be discharged in a Chapter 13 case. One common example occurs when the bankruptcy spouse was ordered by the divorce court to pay the other spouse’s, or joint, credit card debts. In a chapter 13 bankruptcy case, the debtor’s obligation to his or her spouse can be discharged. Similarly, property settlements can also be discharged in Chapter 13.