27 Jan Debt, Divorce, and Dealing with Both in Bankruptcy
Divorce and bankruptcy often go hand in hand. What many people don’t realize is that filing for bankruptcy can make a divorce easier by eliminating the fights and concerns over paying debts that the individuals are not in a position to pay.
Financial problems can contribute significantly to marital problems, so it isn’t surprising that so many people make the decision to file after a marriage has broken apart.
Financial woes often lead to divorce, but deciding to end a marriage doesn’t always end the fights over money, and may make them worse. You now have two people without a common financial goal, and in many instances have financial goals that are directly in opposition to the other’s.
It may make sense for both parties to consider filing for bankruptcy if there are debts that will be difficult to repay by one or both parties. If you can eliminate the fight over who pays what, you might be able to deal with issues like how the parties are going to pay their living expenses and/or child support.
Domestic attorneys don’t always think to include a bankruptcy lawyer in the planning of the dissolution of the marriage, but it can be a good idea. Typically, when a couple divorces, the debts owed are divided up either by agreement in a separation agreement or by the judge. However, if two people with combined living expenses can’t cover the bills, trying to pay for those same bills PLUS cover two separate households is often a disaster.
- Agreeing to, or being assigned, joint debts in the divorce can have serious consequences on the ability to discharge debt in a bankruptcy.
When someone agrees to pay debts either jointly owed or in the name of the spouse in a separation agreement, or is ordered to pay them by a judge, then those debts may not be able to be discharged later in a bankruptcy case even if the person has no money to pay.
If repayment of debt is an issue and you are considering divorce, it might be a good idea to speak to an experienced bankruptcy attorney in your area before you get stuck with debt you can’t get out of.
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