Bankruptcy After Divorce
Going through the pain and problems associated with getting a divorce may not seem like the ideal time to think about filing for bankruptcy, but it can actually be one of the best times to do so. Whether the debts are mostly on your part, the part of your spouse, or are held jointly between the two of you, you should know that filing for bankruptcy during or shortly after a divorce can help lighten your financial burdens and give you a fresh start. It can also be a way to help keep things as amicable and fair as possible.
When you file for bankruptcy during or right after a legal divorce, all of the debt that was acquired during the course of your marriage will be taken care of. This will be accomplished by seizing all of the assets possessed between the two of you, except those few that are exempt, and selling them in order to repay creditors. The longer after the divorce you wait to do this, the greater chance you stand of being more negatively impacted than your spouse. This is why it is ideal, for both parties, to file before the divorce is final and binding. This will help you to split the debt evenly and fairly between the two of you. In most cases, debts will be split fifty-fifty, making no one party more responsible for the debt than the other.
Even after the divorce has gone through, any bankruptcy proceedings you choose to involve yourself in will still have an effect on your spouse. Any of the assets you are liquidating that were acquired during the course of the marriage or that are also held in your spouse’s name will be seized, and both your credit and the credit of your former spouse will also be impacted for a varying number of years, depending on the type of bankruptcy you filed. For this reason, you will want to speak with a bankruptcy attorney or other financial advisor in order to determine the best possible course of action for your exact situation and financial needs and goals.
Ideally, a bankruptcy during a divorce can be worked out amicably between both parties. This will keep surprises and legal battles from ensuing and will also aid in making things as friendly as possible between the two of you. As long as you are both clear on the bankruptcy agreement and on the impact it will have on both of your lives and financial situations, the entire proceeding should be a positive step in the right direction. As you begin your new life, you and your former spouse can both rest with the knowledge that you can do so virtually debt free.