Understanding How Bankruptcy Factors Into a Divorce

Divorce is cited as the most common cause of bankruptcy today. This is because a divorce can be quite costly and also results in a major change to your financial situation. In addition, when going through a divorce you may have to split up your business, lose some retirement income, and much more. Of course, the stress of financial issues can also push people into divorce. If you are going through a divorce and bankruptcy close together, or even at the same time, it can get quite complicated.

Avoid Handling Both at Once

If possible, it is best to either go through bankruptcy first, then divorce, or divorce first, then file for bankruptcy. This is because these are two huge events in your life and they will have a major impact on each other. For example once you file for bankruptcy, an automatic stay is put on your assets, which makes it very difficult to access them and divide them up during the divorce. Also, a divorce that changes who owns a particular asset will directly impact the bankruptcy. You can choose whether to divorce first or go through bankruptcy first, but try not to do them both at the same time.

Not All Debts are Bankruptable

Remember, not all your debts and other financial obligations are going to be discharged in a bankruptcy. When it comes to divorce, you need to keep in mind that alimony payments, child support payments, and most other court ordered obligations won’t go away in a bankruptcy.

Bankruptcy and Divorce Expose Financial Issues

Another reason that divorce and bankruptcy often occur close to each other is because both of these legal actions tend to expose hidden financial issues. If one spouse had been building up credit card debt without the knowledge of the other, for example, it will all come to light either in the divorce or in the bankruptcy. When this happens, the one legal action will often lead to the other.

Don’t Face Either Alone

Both bankruptcy and divorce are very stressful experiences that people go through. They can also be extremely complicated so you don’t want to face them alone. Having an attorney at your side will help ensure everything is handled correctly throughout the process. Contact attorney Ray Garcia to go over your situation and see what your options are. We’ll let you know the best way to proceed, and how we can help you with either the bankruptcy, the divorce, or both!