Bankruptcy and divorce are two legal situations that most people wouldn’t want to find themselves in; much less at the same time. Unfortunately, sometimes circumstances arise that lead to both events becoming a harsh reality for couples and individuals.
If you know that you plan on filing for divorce and know that your financial standing may lead to bankruptcy, here are some points to examine before you jump head-first into both legal battles at once.
Automatic Stay Will Draw Out Your Divorce
Once you start the bankruptcy process for either Chapter 7 or Chapter 13 bankruptcy, automatic stay becomes a wrench in your current divorce proceedings. When an automatic stay is put in place, it can be a relief because creditors can’t contact you.
However, during an automatic stay, your assets and property are all completely frozen until the bankruptcy process is complete.
If you filed for bankruptcy and then rushed out to get a divorce, expect your divorce to get drawn out indefinitely. While your assets and property are frozen, fair and just division of property is impossible, and you’ll have no other choice but to wait it out until the bankruptcy is finalized.
Chapter 7 Doesn’t Erase Everything!
If you think that filing for Chapter 7 bankruptcy after your divorce is finalized will help you get out of essential payments that resulted from your divorce, it’s time to reconsider your plans.
Although bankruptcy forgives several debts, non-dischargeable debts are payments that stay with you.
Despite your financial situation, you will still be responsible for paying the following debt back:
- Court fines
- Attorney’s fees
- Child support
- Spousal support
These are only the non-dischargeable items that result from your divorce. Other payments like student loans and debts owed to government agencies also remain on your financial record.
Bankruptcy During Divorce Leads to More Legal Responsibility
Most people file for bankruptcy because they cannot afford to pay their debts. Unfortunately, bankruptcies usually result in someone needing a bankruptcy attorney to help them navigate the process. So, hiring a bankruptcy attorney while working with a divorce attorney at the same time can lead to avoidable expenses.
Letting a divorce lawyer help you get through your divorce before filing for bankruptcy only helps you save money in the end. After all, the longer your automatic stay lasts during a divorce, the more you’ll have to consult with both teams of lawyers, and in the end, the more money you end up paying when both bills hit.
Are There Any Benefits to Filing for Bankruptcy Before Divorce?
Depending on the emotions that revolve around your divorce and how willing you are to work with your future ex-spouse, there is a slight benefit for filing for bankruptcy prior to divorce. Filing for bankruptcy together forces both parties to share legal fees and filing fees related to the divorce.
Essentially, this move for bankruptcy could be viewed as a money saver, since now one party isn’t going to end up responsible for paying joint debt once the divorce resolves.
Complete Your Divorce Smoothly with Nilsson Legal Group
As you can see, delving into a divorce and bankruptcy at the same time can create a messy situation that ties up both legal events. If you know you’re ready for divorce and want to set yourself up for a less stressful bankruptcy when you file, the divorce lawyers of Nilsson Legal Group can help.
Our team of attorneys can ensure that your divorce is swift, complication-free, and leaves you prepared to handle life as a newly single individual.
Contact us today to learn more about our services or to schedule your free consultation.