Divorce is one of the top reasons people file for bankruptcy. If you and your soon-to-be ex-spouse have considerable debt already, the break up may exacerbate your financial situation. In this article, attorney Liz German discusses how a joint bankruptcy may be the solution for the two of you as you move forward separately.
Wondering if a Joint Bankruptcy is Right for Your Divorce?
Bankruptcy & Divorce
If you’re thinking of, in the process of, or are already divorced and want to file a bankruptcy, there are a few things that you should consider.
Divorce itself is hard enough without throwing a bankruptcy into the mix. But there is a way to make the bankruptcy process less challenging.
Reasons to Consider a Joint Bankruptcy
If you’re considering or in the process of getting a divorce, you might want to contemplate a joint bankruptcy with your spouse if there’s any joint debt or even if you both have individual debt.
It might feel weird to talk to a soon-to-be ex-spouse about doing something together like filing a joint bankruptcy, but really it could be a great option for both of you if you both have debt, so we encourage you to speak with a bankruptcy attorney.
It Can Save You Money
It’ll also save you money in attorneys fees and filing fees by filing a joint case as opposed to individual cases and could save you money in the long run by not being forced into a Chapter 13 bankruptcy.
It Can Give You More Options
And here’s why I say that. If you’re already divorced and are ordered to pay for any joint debt, you might be limited to filing only a Chapter 13 bankruptcy. This is because there’s no protection in the Chapter 7 bankruptcy from being held in contempt of court for violation of an order to pay a joint debt. There is that protection in a Chapter 13 bankruptcy.
However, Chapter 13 bankruptcies are a lot more costly than a Chapter 7 bankruptcy.
This can all be very confusing and a complicated topic, so ultimately, if you’re already divorced, speaking with a bankruptcy attorney about the specific debts that you’re ordered to pay from a divorce will help you find out what chapter of bankruptcy is the best option for you.
Bankruptcy & Support Payments
A question we also often get is whether you can discharge future or back-due child support, alimony, or maintenance. This is called a domestic support obligation, and the answer is no.
You cannot discharge a domestic support obligation. Certain other debts owed to a child, a spouse, or a former spouse could also be non-dischargeable.
So again, speaking with a bankruptcy attorney about your specific situation is so important, because no case is one size fits all.