Whether to File Bankruptcy After Divorce: Consider These Scenarios
Divorce is difficult enough without also worrying about finances after the divorce and whether filing for bankruptcy after divorce makes sense and will help you out. In some situations, the spouse ordered to pay the other doesn’t hold up their end of the bargain in the settlement or divorce decree. You can go back to court and try to order the deadbeat spouse to pay what they were ordered but that doesn’t stop the creditors who want their money. When you cannot pay them, you may wonder if a Chapter 7 or Chapter 13 bankruptcy will save you.
The creditor knows one thing, it wants to be paid. The creditor could care less whether you have a court order that says your spouse is ordered to pay the credit card, when you are liable for the debt and it remains unpaid you risk damage to your credit, collection efforts, lawsuits and wage garnishments.
Few people will criticize you for filing bankruptcy after a messy divorce where you and the former love of your life are left to fight over debt. In some cases, the former spouse just wants to punish you by not coughing up the money they owe you to pay off debts.
Read our blog article: 7 Bankruptcy Repercussions Are Myths Not to Worry About.
A Personal Bankruptcy Only Affects Your Credit, Not Your Spouse
Bankruptcy laws are there to protect you when you cannot afford to pay debts. Chapter 7 is the typical full discharge we think of and Chapter 13 is a reorganization bankruptcy where you repay a portion of your debts over a three to five-year period. While you and your spouse may be jointly liable on a debt, you both have independent personal credit ratings and those scores are totally separate.
When you are looking for bankruptcy answers and call Joseph Wrobel’s Chicago Bankruptcy Firm, he will find out whether you and your former spouse are both liable on certain debts. Mr. Wrobel can tell you what happens when one spouse files bankruptcy and the other has not and is still liable for the debt.
Is the debt discharged if two people are listed? Or, simply, is the obligation for one party to pay the debt discharged and the other is on the hook? What happens if the debtor comes after the other party to pay the debt when it was ordered to be paid by the other by the divorce court? Call Joseph Wrobel, Ltd. in Chicago if this is your problem. (312) 781-0996.
Read another article: Don’t Believe the Hype: Get the Real Truth About Bankruptcy, Ignore the Rumors.
You and Your Former Spouse Accumulated Debt During Marriage
When you were married, you and your spouse worked hard and spent money keeping up with your friends and neighbors. As you approached your divorce your divorce lawyer asked you to complete paperwork listing all your assets and debts. Shocked, you realize how much your debts outweighed assets. Yes, your marital home was beautiful, but everything was financed.
Most couples approaching divorce are dividing debt at the end of the marriage. Houses are mortgaged with second mortgages and lines of credit. Credit cards are carrying transferred balances from other high interest cards. Vehicles are financed or leased. In many divorces, the only assets available are vested funds in retirement accounts.
The High-Income Earner Paying for Two Residences and Child Support
Divorce is very expensive, especially for the spouse making more money. The higher income earner may be ordered to pay alimony. When there are minor children, there is also an obligation to pay child support. Even a professional earning significant income feels the immediate reduction in their income needed to pay bills and live from day to day.
Many people simply run out of monthly income when paying alimony, child support and other debts ordered to be paid by the court. Is it a surprise some people simply stop paying? No.
You Are the Higher Wage Earner and Want to File Bankruptcy After Divorce
With a few options on the table you owe lots of money and have some decisions to make. In most cases any child support obligation will be automatically withheld from your paycheck. With what is left you simply cannot make it. Maybe you want to file bankruptcy to eliminate the credit card debt you were ordered to pay. Maybe you realize you can no longer afford the mortgage on the expensive house or financed luxury vehicle. It is time to downsize.
Before you take advantage of the bankruptcy laws consider your obligations to your former spouse and children and ask Joseph Wrobel about your obligations in the family court. He can talk to your divorce lawyer and help you make the best financial decision that gives you a break without hurting your former spouse and your children.
You Are the Dependent Lower or No Wage Earner and Need to File Bankruptcy After Divorce
If your former spouse and co-parent identified in the paragraph above did not heed our advice not to hurt you or the children by leaving you high and dry, you can get the help you need with the bankruptcy laws. Depending on your settlement agreement and divorce decree you might need to consider whether to include certain debts to be discharged in your bankruptcy. Like your former spouse would, you too should ask Joseph Wrobel to help figure out what to do with post-decree divorce financial obligations.
When you do file for a Chapter 7 or Chapter 13 bankruptcy, your phone should stop ringing as debt collectors are prevented from collecting or contacting you during bankruptcy. The “Automatic Stay” provision also stops a Wage Garnishment. Helping you keep money in your pocket during the bankruptcy is what we do for you at Joseph Wrobel, Ltd.
Have you seen this one from a few years back? Credit Scores, Cards and Reports: What You Might Not Know.
Your Spouse Files Bankruptcy After Divorce, How Does Joint Debt Impact You?
Joint debt means joint responsibility. If you and your former spouse are both named on a financial account, then you both are jointly responsible, regardless of what it says in the divorce decree. If your ex-spouse is ordered to pay and they stop paying, the obligation becomes yours, 100 percent.
With so much uncertainty about Filing for Bankruptcy After Divorce, talking to both your divorce lawyer and a bankruptcy lawyer such as Joseph Wrobel is necessary, so you don’t worsen your financial position and future if things do not go as planned after the divorce.
Call Joseph Wrobel, Ltd. in Chicago today at (312) 781-0996 and learn your rights and options under the law if you are considering filing for bankruptcy after divorce.