May 14, 2015

Divorce and Bankruptcies: A Delicate Balance

Divorces are based around the division of assets and liabilities between two married people. It can be expensive and result in bankruptcy for participating parties, which makes things more complicated.

Filing for bankruptcy before or after your divorce can simplify the process. If you do it before, you can save a lot on court fees if you do a joint application. Plus, since you’re both bankrupt, you’ll have less assets and liabilities to apportion during the divorce. Filing for bankruptcy can also protect some of your property from being sold off for debt payments, though you may need to talk about how that property will be affected by the divorce.

Filing for bankruptcy after the divorce is a more complicated affair. This is because by then, debts would have been allocated and settlements decided by the court. One thing you’ll have to remember is that any support that the court has decided on cannot be stopped by a bankruptcy filing. Normally, any debts that are still outstanding when you file a divorce cannot be collected on according to the Bankruptcy Code. Support and alimony, however, are exempt from this automatic stay.

In the end, the complexity of the laws surrounding bankruptcy and divorce necessitates you to hire a bankruptcy lawyer. With her help, you can untangle this situation and ensure that you come out of your separation with the best possible results.

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