Once a divorce happens, income does not change but the cost to operate two households instead of one increase. Financial planning can help one transition from married to single lifestyle. There is a need to prioritizing financial goals, developing realistic expectations, and producing written plans for allocation of financial resources. Settlement moneys need to last a significant amount of time, sometimes the rest of their lives.
Divorce impact on bankruptcy
Divorce affects bankruptcy when it comes to the division of marital property. In Washington State, property acquired over the course of a marriage or other any assets must be equally divided:
- Equity in a home
- Bank accountsBankruptcy and Divorce
- Retirement funds
- Any other assets
If your spouse starts bankruptcy proceedings before the judge finalizes your divorce, you might want to think about jointly filing for bankruptcy, especially if the majority of your debt obligations are in both your names.
When it comes to the division of debt, the terms of a divorce settlement do not affect the agreement you and your spouse have with creditors. A bankruptcy lawyer will work closely with CPAs, forensic accountants and business evaluators, as needed to assist you.
Because a creditor is not considered a party to a divorce agreement, you will still be responsible for the joint debts, even if your husband is the only one who will be declaring bankruptcy. If you jointly file for bankruptcy before your divorce, you will be able to avoid many of the headaches involved in negotiating the division of assets and debts because most of this will have been settled by the bankruptcy proceedings.
Bankruptcy impact on Divorce
Filing for Bankruptcy can help in some divorce cases.
Divorce is a significant stressful event in people’s lives. Lawyer, court costs, and the expenses of two households can create financial stressful situations.
Bankruptcy and divorce statistics:
- Financial stressors frequently lead Americans to file bankruptcy. Statistics from 1980-2008, “90 percent of Bankruptcy filers experienced a job loss or medical hardship during their divorce.”
- Depending on the laws of the state (community property or equitable distribution), you may find yourself owning less property and more debt than you did before your marriage.
- Many divorces today include orders for alimony or child support. For people struggling to get by on just one income, their paycheck just will not stretch far enough to meet these obligations and still be able to pay the other bills.
Chapter 13 Bankruptcy allows clients a period of three to five years to get current on their debts with making payment in a regular repayment plan. Chapter 13 bankruptcy works best with those with a dependable income income, significant non-exempt assets, or property they want to keep.
Chapter 7 bankruptcy allows clients to discharge many of their unsecure debts. Debts that are designated by the divorce court may not hold up in a bankruptcy court. One spouse’s assigned debt during a divorce may be assigned to the other spouse during a bankruptcy filing.
Contact your ex-spouse if you are considering a bankruptcy filing because there is a possibility of one spouse being held responsible for debts, which were assigned to the other spouse during divorce.
In addition, it is important to note, filing a joint bankruptcy is usually not available to divorced couples, even if much of the debts are held jointly. Contact us below for a free bankruptcy consultation or questions.
Advantage Legal Group is a debt relief agency providing bankruptcy services, foreclosure defense services, mortgage mediation and real estate short sales in Bellevue, Seattle, Kirkland, Redmond, Mercer Island, Issaquah, Tacoma, Everett, King County, Pierce County, Snohomish County and Western Washington.
If you are in need of a bankruptcy attorney in Seattle, Bellevue or Western Washington give us a call for a free bankruptcy consultation: 425-452-9797.