Divorce Attorney

Bankruptcy And Divorce: Striking Terror Together

Divorce and bankruptcy are two of the most dreaded words in the English language when taken separately. Together, the effect is one of striking real terror. If a dissolving marriage is not damaging enough, then coupled with bankruptcy, the suffering gets multiplied a thousand times more.

Finances have always been a part of the divorce procedure, which in itself is a most trying time even for the calmest of persons. Funds are required most during divorce processes. Bankruptcy as we all know is the inability of an individual or a body to pay their creditors to whom they owe money. Most of the times though, bankruptcy is declared by the debtor, person, or organization to indicate they are unable to pay. Bankruptcy has as it primary aim to allow the debtor a restart by clearing most of the debts owed by the debtors and setup a repayment order for creditors in a disciplined manner, which will enable the debtor to have means for the payment.

When bankruptcy becomes part of the divorce, it may derail the process as well. If your spouse has declared bankruptcy, the advisable thing to do would be to file the same yourself. Since bankruptcy wipes the slate clean for both parties and in case you haven't filed for the same, your spouse will get off the hook because of the bankrupt status. This would lead the creditors to pursue you for the collection of their entire amount. Property division issues in a divorce will also come to a halt if your spouse files for bankruptcy during the divorce proceedings and will be postponed till the latter issue is resolved first. This particular situation is called an automatic stay and is triggered by the bankruptcy laws. Contacting a competent bankruptcy lawyer is the best bet in this kind of a situation because it will propel you to make the right moves in the right direction.

Coming back to the issue of an automatic stay, this can be partially lifted to continue with other proceedings such as child custody and divorce and support matters, on a limited basis of course.

You should consider the characteristics of the assets and liabilities that are listed in bankruptcy for different types of status, be it separate, community, or marital. Realizing their characteristics first will help you to determine the course of action to be taken in this situation. For community assets and debts, you may want to file for bankruptcy as well. Debts may include your spouse's separate property or your substantial separate property. This may not encourage you to join in the declaration for bankruptcy, but will also probably have to do a lot of negotiation with joint creditors, who will look to you for settling of the debts.

The money paid by you as balance of a debt that your spouse charged on bankruptcy is best not expected back. The law itself is designed to let your spouse wipe the slate clean. However, the judge presiding over your divorce proceedings may take into account the fact that your spouse now has an increased capacity for payment of support or a decreased requirement for support by virtue of the bankruptcy.

Divorces are a messy affair. Coupled with the problem of bankruptcy, it can turn messier than ever. But don't lose hope. With a competent lawyer to help you be confident of being on the right track and the right side of law.