Eliminate Marital Debt with Bankruptcy
Debt – Marital Debt and financial pressure are two of the main causes of divorce, but even when debt isn’t directly the fault, dividing up a family may be a significant budgetary burden. Both spouses now have identical and double living expenses to contend with, as well as less income to cover those expenses. If both spouses jointly owe a debt secured by a vehicle or a residence, the parties may agree, or the divorce court may rule, that one person is accountable for paying the debt while the other is obligated to pay it. What’s the result? For the non-paying spouse, credit damage and headaches can last for years after the divorce.
It is normal for divorcing couples to consider filing for bankruptcy, whether before, during, or after the divorce is finalized. There are a few things you should know before taking this step, and an experienced bankruptcy lawyer at Hilbern Law can guide you through the process and answer any questions you may have.
Should I File Bankruptcy Before the Divorce?
A joint bankruptcy filing may be the smartest and easiest option if the parties are divorcing amicably and can collaborate when filing for bankruptcy and if they are both eligible for a Chapter 7 bankruptcy. Debt – Marital Debt can be discharged in about three months under a joint petition, leaving only non-dischargeable debt, such as taxes, to be shared during the divorce proceedings. If a debt is secured by a vehicle or a home, the party who is not maintaining possession and paying for the vehicle or property will have the obligation discharged, or eliminated, and will no longer have to worry about whether the other party is making payments.
Filing a joint Chapter 7 bankruptcy before filing for divorce will save you money on filing fees and attorney fees. In other words, a “two for the price of one” situation may benefit both parties. Parties may also be able to double their exemption amounts, ensuring that their marital property is protected from creditors or lenders seeking repayment. More importantly, this strategy helps to avoid squabbles in the divorce over Debt – Marital Debt and finances.
We rarely advocate Chapter 13 bankruptcy before a divorce at Hilbern Law since this option demands a three- to the five-year payment schedule. Both parties must be active participants and willing to communicate throughout the process, and most soon-to-be-divorced couples, in our experience, would want to settle their money as soon as feasible.
Should I File Bankruptcy During the Divorce?
Unless there are exceptional circumstances, parties should avoid filing for bankruptcy while going through a divorce. A bankruptcy lawyer who represents both parties during a divorce will almost always have a severe conflict of interest, which both parties must admit and waive to proceed with the bankruptcy filing. Furthermore, a spouse who hires an Oklahoma City bankruptcy lawyer to file for bankruptcy and discharge Debt – Marital Debt before the divorce is final may be required by the divorce court to repay one or more debts. Even if the creditor is unable to collect from the spouse who is going for bankruptcy, the other party might reveal that the other is not abiding by the divorce decree.
What is Chapter 13 Bankruptcy and How Can it Help Me?
A Chapter 13 bankruptcy is your greatest bet for getting your car back or avoiding having it repossessed in the first place. If you file for Chapter 13 bankruptcy before your automobile is repossessed, you may be able to keep your car if you act swiftly. In a Chapter 13 bankruptcy, you can recover past-due payments, or arrears, over three to five years by following your repayment plan.
Should I File Bankruptcy After the Divorce?
Waiting until the divorce is finalized before filing for bankruptcy may make sense in some situations, and an experienced Oklahoma City bankruptcy attorney at Hilbern Law may assist you in making this decision. After the divorce is finalized, both parties will have a clear awareness of what debts they are responsible for, if any. Furthermore, if a partner was previously ineligible to apply for Chapter 7 while married, he or she may suddenly be qualified due to a prospective reduction in income. Keep in mind that a spouse who has been a stay-at-home parent for the past few years may encounter unique problems when it comes to re-entering the workforce, and that the income may be much lower than before.
Some couples may agree to take on debt during divorce procedures, assuming they would be able to repay it without problem, only to discover months or years later that they are unable to pay both the loan and their basic living expenditures. If their ex-spouse defaults and fails to pay his or her portion as promised, they may find themselves liable for a joint secured debt.
What Debts Will be Forgiven in Bankruptcy?
When a person files for bankruptcy, the majority of his or her obligations are dischargeable, which means that he or she is no longer legally obligated to repay them. Child support and spousal maintenance, on the other hand, are not dischargeable debts and will remain unaffected by bankruptcy. Similarly, property settlement agreements may not be discharged in a Chapter 7 bankruptcy, but they may be discharged in a Chapter 13 bankruptcy. A Chapter 13 bankruptcy may also prevent creditors from pursuing collection methods on the other ex-spouse for three to five years.
Can I eliminate Divorce Attorney Fees in Bankruptcy?
If a party has legal debt from a divorce action, such as attorney fees, this debt can usually be erased in a bankruptcy filing as long as the bankruptcy is filed after the divorce. If a divorce court directs one spouse to pay the other spouse’s attorney fees, the debt is treated as domestic support, similar to child support, and cannot be dismissed in bankruptcy.
Contact Us Today
Divorce may be a difficult and perplexing process in and of itself. When you add in the possibility of filing for bankruptcy, it becomes even more tough. Hilbern Law, fortunately, may assist with divorce debt. We are here to answer any questions you may have about bankruptcy and to provide a plan that we believe will offer you the best possible outcome. We’ll assist you in resuming your usual life as soon as possible. To learn more or to schedule a Free Bankruptcy Evaluation, call (405) 213-1919 immediately.
You have nothing to lose but your debt.