Divorce & Bankruptcy
The mere mention of bankruptcy or divorce is enough to make most people cringe. These two legal processes generally have negative connotations, which are unfairly deserved since both procedures offer people a fresh start in areas of life that frequently overlap. Planning ahead can make both your bankruptcy and your divorce less complicated and more cost effective. If bankruptcy is an issue and you are considering filing for a divorce (or vice versa), it is important to consult with an attorney who can advise you of your rights and options, and will develop a successful strategy.
With over 35 years’ experience in our community, the Fayette County bankruptcy lawyers at Bunch & Brock are committed to providing each of our clients with a high level of personal service. We are dedicated to helping those in our community who may find themselves struggling with overwhelming financial problems and who may have marital ones as well. We take the time to fully understand your situation and discuss options for debt relief. Let us work with you to make the best plan for eliminating or repaying your debts. We encourage you to contact our office by calling 859-254-5522 or filling out this online form.
There’s no doubt that money and love are two of the most emotionally charged issues in life – and they are often intertwined. Generally, the wisest course of action when divorce is on the table is to resolve as many problems as possible before filing. Divorce issues can impact requests for bankruptcy relief. By filing for bankruptcy, your responsibility to pay dischargeable debt is wiped out. Once that is taken care of, you can file for divorce – but be sure not to agree to pay any of the joint debts that may still be in your name. For example, if you and your spouse have joint credit card debt, you can reestablish the liability wiped out by the bankruptcy by agreeing to be responsible for that debt as a condition of your divorce. This is very important because if divorce is filed first and you agree to be responsible for any jointly held credit cards, your bankruptcy would not eliminate your responsibility to pay.
Another issue that arises if bankruptcy is filed between the filing of divorce papers and the final judgment of divorce is that the bankruptcy’s automatic stay prevents transfer of property between the couple. The automatic stay will cause a temporary standstill in the divorce proceedings as to division of property and debts, because a state family court cannot make decisions about property as long as a federal bankruptcy court has control over it. Thus, you should avoid filing for divorce and bankruptcy simultaneously, because the bankruptcy should be finished before the divorce can be completed.
Filing for bankruptcy before a divorce can simplify the issues regarding debt and property division, resulting in lower divorce costs. Bankruptcy will also eliminate contracts that neither spouse wants, such as car loans that are too pricey or underwater mortgages. While there are instances where filing for divorce first may be preferable, it is highly dependent on individual circumstances. The biggest advantage may be having the support considerations already worked out. If you are going to owe a lot of support, it helps to know that amount before declaring bankruptcy since child support and alimony are not dischargeable debts and survive bankruptcy.
Eliminating debts through bankruptcy prior to filing for divorce means there is one less large issue the parties have to address in the proceeding, but the laws surrounding divorce and personal bankruptcy are complicated. Each person’s situation has a unique set of facts, and the best course of action varies depending on where you live, how much property you have, how much debt you have, and what type of bankruptcy you wish to file. For more detailed, specific information, consult the Lexington, KY bankruptcy lawyers at Bunch & Brock by calling 859-254-5522 or filling out this online form. You can rely on us for accurate, honest case analyses and dedicated representation. We have helped countless individuals get the relief they deserve given their personal set of circumstances, and we can help you.