Although alimony and child support cannot be discharged through bankruptcy, a bankruptcy before you divorce may nevertheless offer some advantages. A Loveland bankruptcy attorney can show you how filing for bankruptcy before divorce may benefit you.
Divorce is never easy for anyone, and when divorcing spouses are also parents, a divorce can be exceedingly difficult. A couple’s financial circumstances and status may be complicated and disputed. An acrimonious divorce trial may last for weeks or even months.
Along with the emotional exhaustion that many people feel during and after a divorce, the process can also be quite costly. After the division of the marital debts and assets, it’s possible that one or both spouses may end up in difficult financial circumstances.
Should You File for Bankruptcy?
If you’re considering or anticipating a divorce in Colorado, keep reading, and you’ll learn why divorcing spouses so often decide to declare bankruptcy. You will also find out why bankruptcy may provide you with some genuine advantages if you’re divorcing.
The smart way to begin the bankruptcy process in this state – especially when a bankruptcy is linked to a divorce – is seeking guidance and advice from a Colorado bankruptcy lawyer who routinely works with bankruptcy clients who are obtaining a divorce.
As we all know, money problems are perhaps the number one reason for divorce. Far too many couples slide into debt slowly and inadvertently. If a serious illness or injury happens when you’ve already missed a couple of car or mortgage payments, you might be quickly overwhelmed by debt.
When financial difficulties like these trigger a divorce, instead of disputing over the cars or the house, the main dispute between spouses in a divorce proceeding might be “Who gets the debt?”
Can You Be Held Liable for Your Ex-Spouse’s Overspending?
In Colorado and the other forty-nine states, both marital partners are responsible for any debts incurred while they were married.
Although Colorado divorce courts usually divide marital assets and debts and make each partner accountable for approximately half the debt amount, the divorce settlement ordered by the court will not be binding on either your own creditors or your ex-spouse’s creditors.
In other words, if your former spouse does not pay his or her part of a marital debt – as ordered by the court – creditors will not care what your divorce settlement requires. Your ex-spouse’s creditors or the collection agencies they have hired may launch aggressive efforts to collect from you.
And after your divorce, if your ex files for bankruptcy, you’re the only one that the creditors will be able to pursue for your ex-partner’s debt. If your finances are a problem after your divorce, and if your ex files for bankruptcy, you may also need to declare bankruptcy – simply to protect yourself.
How Will a Bankruptcy Lawyer Help You?
No one wants to be harassed by creditors about an ex-spouse’s debts. If you think your ex-spouse will file for bankruptcy – and stick you with his or her share of the marital debt – schedule a meeting with a Loveland bankruptcy lawyer right away to discuss bankruptcy and your rights.
Bankruptcy provides legal protections and practical benefits, but it also entails some quite negative consequences that you should speak about with your attorney. When your situation improves after a bankruptcy, rebuilding your credit and finances should become a top priority.
Every marital and financial situation is personal and unique, so having personalized and reliable bankruptcy advice is imperative. Do not try to navigate the bankruptcy process by yourself. Mistakes are costly, they delay the process, and your bankruptcy petition could even be denied.
A Loveland bankruptcy attorney will protect your rights, explain your options, and provide helpful guidance, sound insights, and practical suggestions as you move through the bankruptcy process.
Should You and Your Spouse Jointly File for Bankruptcy?
Some divorcing spouses don’t even speak to each other, but when they can agree to cooperate, divorcing spouses may benefit from jointly filing for bankruptcy prior to filing for their divorce. What can make a bankruptcy filing before a divorce a smart move for both spouses?
- Bankruptcy clarifies your financial situation fully and precisely.
- You’ll know exactly what the marital debts and assets are before the divorce.
- After the bankruptcy concludes, you both have a “clean slate” financially.
How Can Bankruptcy Benefit You?
“Chapter 7” bankruptcies discharge – that is, eliminate – “unsecured” debt like medical debts and credit card debts. When you seek a Chapter 7 bankruptcy, you will still have to pay student loan debt, tax debts, and fines or payments that are court-ordered.
Almost anyone may seek a Chapter 13 bankruptcy, and if you can pay a portion of your debts, you might not even be eligible for a Chapter 7 bankruptcy. “Chapter 13” bankruptcies require you to pay your debts but provide you with the time you may need.
Divorcing spouses in Colorado should also know that a joint bankruptcy filing is considerably less expensive than two separate, individual bankruptcy filings. Obtaining a joint bankruptcy before a divorce proceeding will also reduce the expense of a divorce by making the division of debts and assets simpler and easier.
A joint bankruptcy may substantially reduce the amount of marital property, so a divorce will cost less after a joint bankruptcy, and it will take less time.
Moving Ahead After Bankruptcy
Of course, debt and overspending don’t have to be the reason why your marriage dissolves. A couple may be able to resolve their financial problems by filing jointly for bankruptcy, and they may then find that they’re able to save their marriage.
If one spouse overspends, underlying issues may be the reason, and a marriage counselor might be of assistance. Other married couples only need dependable counseling about their finances and the services of a debt attorney for handling debt negotiations and dealing with creditors.
When financial difficulties arise in marriages, seeking the right marriage counselor is always the wisest first step to take. Seeking advice and guidance from a Colorado bankruptcy lawyer is your next step.
Moving into the future after a bankruptcy or divorce may be a personal challenge, but if you have patience, self-discipline, and the right attorney’s advice, rebuilding your finances after a bankruptcy – and your life after a divorce – are challenges that you can quickly overcome.