Filing for bankruptcy before a divorce
If you are considering a divorce, you will reach the point where you must consider how to handle your assets. Additionally, you will have to decide how your debts will need to be handled.
Divorce is one of the most common reasons why someone files for consumer bankruptcy. Many times, unknown debts become revealed during this process. A spouse may already be grappling with significant financial concerns due to losing an income that was necessary to support the household, taking on more financial responsibilities due to separating or having to pay expensive legal expenses. Many people avoid the topic of bankruptcy because they think that they can salvage the situation. However, many times this is simply not possible. Rather than avoiding the subject, you may want to consider the benefits that a bankruptcy at this point may provide.
Filing for bankruptcy establishes an automatic stay so that collection efforts are halted. Harassing phone calls must come to a stop. If eligible for a Chapter 7 bankruptcy, most consumer debts can be discharged, including credit card and medical debt. Foreclosures and seizures of other assets may be at least temporarily stopped. If ineligible for Chapter 7, Chapter 13 bankruptcy can provide much needed relief by allowing you to reorganize your debts and set up a payment plan. In the context of a divorce, a bankruptcy can often speed up the process since the debt division becomes more simplified.
Under state and federal law, there are many assets that are exempt from liquidation in a Chapter 7 proceeding so you can use these to your betterment after the divorce. If you would like more information about how this could apply to your situation, you are invited to visit our page on the subject.