Divorce and bankruptcy are both immensely stressful experiences. Emotions and finances are often stretched thin, and it can be difficult to know how best to proceed. If you are facing this tough situation, our Morris County bankruptcy lawyers are ready to help you move past this stressful time and establish a solid footing for the future.
There are key differences between filing for bankruptcy before and after a divorce. Although the results are ultimately the same – a discharge of debt and a financial “clean slate,” there is a right way and a wrong way to go about filing for bankruptcy in the face of divorce. It is important to realize that each case is different, and no one should attempt to file for both bankruptcy and divorce without seeking qualified legal assistance.
Considering Filing Bankruptcy Before Divorce?
In cases where both spouses intend to file for bankruptcy, it may be better to begin the bankruptcy before the divorce. In addition to save money on filing fees and court costs, couples filing joint bankruptcy may later have a simplified divorce with leaner assets and fewer debts to divide. An added benefit is that a Chapter 7 bankruptcy case only takes a few months to complete, meaning that a couple can receive the discharge relatively quickly and then move forward with divorce proceedings.
However, there are certain caveats to filing before divorce. A couple’s combined income may render them ineligible for a Chapter 7 bankruptcy. Additionally, a Chapter 7 case may liquidate certain property that one spouse wanted to keep, such as a vehicle or home. If you are considering bankruptcy and divorce, you must speak to qualified legal counsel to weigh your options with these issues in mind.
Considering Filing Bankruptcy After Divorce?
Generally speaking, Chapter 13 bankruptcies might be preferable for individuals in cases where the divorce is already finalized, or if the couple decided that they will not jointly apply for bankruptcy. In a Chapter 13 case, a person’s debts are structured into a payment plan that lasts three to five years. At the conclusion of the plan, the rest of the debt is discharged and the person can begin their financial record anew.
Many debts can be included in a Chapter 13 plan, including credit card payments and medical bills. However, divorce-related payments like alimony and child support cannot be discharged or forgiven under any form of bankruptcy. Family obligations are priority creditor claims, but they can be worked into a Chapter 13 case for easier payment and management. After a Chapter 13 bankruptcy is completed, most people will find that the discharge of other debts makes it easier to fulfill these family obligations.
I Need a Bankruptcy Lawyer in Morris County
It is essential to speak with qualified legal counsel when making decisions in divorce and bankruptcy cases. Every situation is unique and requires a different approach. With a Morris County bankruptcy attorney on your side, you can rest assured knowing that your case will be handled in a way that serves you best.