The Frequent Alliance between Bankruptcy and Divorce:
Every individual situation is unique in both bankruptcy and divorce. There are many important considerations when divorcing, often deciding when to file bankruptcy is one of them. The descriptions and information provided here should not be construed as legal advice and anyone contemplating filing bankruptcy should speak with an attorney familiar with their State and it’s laws. Oregon residents are encouraged to contact me.
Situations where bankruptcy may be an option.
Losing half your income but keeping all the debt:
After a divorce there are usually two households, but the same amount of money to run them. A troubling situation is one in which there is less money, but the same amount of bills. Despite what you and your former spouse agreed upon in the divorce, you can be held responsible by your credit card companies for all debts in your name. Unless you are removed from the loan, you will also be responsible for the payments on any vehicles purchased through a loan under your name. A chapter 7 bankruptcy can eliminate that debt and free up money necessary for utilities and rent.
Can’t have one without the other:
There are certain requirements in bankruptcy for household income as well as debt limitations. Whether you are part of a married couple or freshly single can have a profound impact on you or your spouse’s eligibility to file. If there is substantial debt in the marriage it can be very helpful to meet with a bankruptcy attorney early on in the process to explore your options.
It’s time for a true Fresh Start:
A lot of shared debt that needs to be gone in order to start anew. Perhaps a truck or Recreational Vehicle (RV) was repossessed leaving a deficiency judgment that neither party can pay. Sometimes the debt on a boat, a car, or an ATV was affordable before the divorce, but there is now no way to repay it. In order for each party to truly start over, it is necessary to get out from under these expenses.
Sometimes what is good for one person may not be good for the other:
There are many situations in which it may be advantageous for one party to file bankruptcy pre-divorce, while the other party would benefit by waiting. If one party is starting over with a new career or has been out of the job market for a while, it can take some time to get re-established. If accidents happen after you file bankruptcy, those debts can’t be included. Many times it is better to wait until after you have gotten back on your feet before filing, but the other party may not see it that way. A good general rule is to visit a bankruptcy attorney yourself for a free initial consultation and, after you find out how it would affect you, then decide whether to bring your spouse in to consult. There is a clear conflict of interest between a divorcing couple and this may effect a bankruptcy attorney’s ability to represent both parties. It is a good practice to recommend that both parties consult separate attorney’s to determine whether filing bankruptcy is in their best interest.