Bankruptcy After Divorce
How Do You Handle Bankruptcy After Divorce?
There are many people who find themselves in financial difficulty after a divorce. In some cases, the couple’s joint income is enough to support one household, but, separately, they are often not able to make ends meet. In other cases, the financial burden created by the divorce agreement is sometimes too much to bear. Our firm can walk you through filing bankruptcy after the divorce.
If you are having difficulty keeping up with your bills, consult with an experienced Charleston bankruptcy lawyer to explore your debt relief options. At the Steadman Law Firm, P.A., we have helped many people work through their financial challenges after a divorce.
Automatic Stay After Divorce
Bankruptcy after a divorce can give you relief from collections calls and potential lawsuits. You may have accumulated significant debt in your divorce or you have incurred it afterwards. With that debt, you may be facing calls from third party collection agencies, creditor threats, and lawsuits in court. You may even have to deal with foreclosure of your home or repossession of your car. You can stop all of this with bankruptcy after divorce.
When you file bankruptcy after divorce, the court will issue an automatic stay. An automatic stay will put an end to all collections practices, including pending lawsuits, foreclosure, repossessions, and calls. If a creditor calls you or threatens you again, you should tell them the case number of your bankruptcy and give them your attorney’s phone number.
Debts That You Can Discharge With Bankruptcy After Divorce
You can eliminate, or at least manage, most of your debts through bankruptcy after divorce. While much of your debt may have been joint between your spouse and yourself prior to divorce, it may have been put into your name after the divorce. You can manage most of it through a Chapter 7 or Chapter 13 bankruptcy.
You can discharge most of the following types of debt through bankruptcy after divorce:
- Credit card debt
- Accounts with collection agencies
- Medical debt
- Personal loans
- Past due utility bills
- Checks that have been dishonored (excepting fraud)
- Student loans when undue hardship can be proven
- Deficiency balances for repossession
- Personal injury claims
- Some debts from businesses
- Past due rent and other money owed through lease agreements
- Civil court orders
- Unpaid taxes that are a certain number of years old
- Fees and charges from attorneys
- Charge accounts
- Overpayments by Social Security and veterans assistance
If you choose to file a Chapter 7 bankruptcy, then most of your debt will be discharged. Chapter 7 is often called “liquidation bankruptcy.” Through the bankruptcy process, your debts will be compiled and completely eliminated. You may have to sell some of your property to repay creditors. However, much of your property will likely be exempt from the bankruptcy. Contact an attorney to find out how a Chapter 7 bankruptcy can help you after divorce.
Chapter 13 bankruptcy will give you a payment play that will allow you to repay some of your debts in three to five years. Chapter 13 is often called a “reorganization bankruptcy.” You can consolidate your debts into a payment plan, and you will be able to manage them over a longer period of time. You can also discharge some of your debt after the conclusion of your bankruptcy after divorce.
Debts That You Can’t Discharge With Bankruptcy After Divorce
Although you can discharge much of your debt through bankruptcy after divorce, some of it is non-dischargeable. For example, you can’t discharge child support. However, property settlements may be able to be managed. Although a Chapter 7 bankruptcy cannot do away with property settlements, a Chapter 13 bankruptcy can include property settlements in a three to five year payment plan. If you do not completely repay the property settlement in the repayment plan, then bankruptcy may discharge it completely.
Speak with an attorney immediately if you have family law obligations that need to be handled through bankruptcy after divorce. Although some of your obligations may not be eliminated, they may be managed in some types of bankruptcy.
A support payment involves a monetary amount that:
- Will no longer be paid if the ex-spouse gets remarried or dies;
- Is dependent upon the amount of income your ex-spouse earns;
- Is paid in regular monthly payments; and
- Was supposed to pay expenses and other needs of your ex-spouse.
If you owe a support payment, then they cannot be eliminated through divorce after bankruptcy. However, other payments that you may be ordered to pay your ex-spouse may be included in a bankruptcy in certain circumstances.
Paying Debts Through Bankruptcy After Divorce
When you file bankruptcy after divorce, the court may order you to pay some of your debts. In order to obtain any available money, a creditor must complete a proof of claim form and file it with the federal bankruptcy court. Your bankruptcy trustee will review any proof of claim forms that creditors have submitted and determine which debts take priority. Those that are considered more important will get paid first out of your available assets.
Your support arrearages will be paid first in most situations. You may have to liquidate some of your property in order to pay your debts, including support arrearages. After that, other debts may receive any funds that are left.
What Happens When Your Ex-Spouse Declares Bankruptcy?
Anyone may file bankruptcy after divorce, including your ex-spouse. If you had joint debt with your ex-spouse, then you may be responsible for the debt that you held with them. Creditors do not automatically separate debt upon divorce. Your debt will endure regardless of your relationship status. If your ex-spouse files bankruptcy and eliminates their responsibility to debt, that debt may fall on you.
If your ex-spouse recently filed bankruptcy and you are now responsible for what used to be your joint debt, you should talk to a debt lawyer right away. You may have legal options to manage that debt, or you may be able to file bankruptcy after divorce as well.
Moving Forward With Bankruptcy After Divorce
If you have decided to file bankruptcy after divorce, then you have an opportunity to start anew. You can get your finances in order and eliminate the debt that you cannot pay. Work with an attorney and financial advisor to move forward with your life after both divorce and bankruptcy.
You have likely been dealing with a lot of difficult situations as you’ve been through two stressful legal matters recently. Divorce can change your life, but it can also give you serious financial burden. Bankruptcy can help eliminate much of that burden.
Helping You Get Back on Track
We understand the stress that comes with financial difficulty, especially after going through a trying divorce proceeding. We will work with you to find the right debt relief solution to fit your needs. You may be able to eliminate certain divorce-related debts through bankruptcy, but there are others you can’t dispose of. You can rely on a Charleston bankruptcy lawyer to stand up for your rights and see that you receive a fair legal process.
For example, any court-ordered child support or spousal support cannot be eliminated, but you may be able to make up your back payments through a Chapter 13 payment plan. However, if you were ordered to pay a debt — such as a credit card bill — in the divorce settlement, it may be possible to eliminate it completely in a Chapter 7 filing.
Contact a Bankruptcy Attorney Today
As you can see, you have a number options to pursue in these situations. Our founding attorney, Richard A. Steadman Jr., will help you understand both the pros and cons of a particular course of action and give you all the information you need to make a sound decision. We provide personalized service to every client. We will be there with you every step of the way and see you through to the end.
Steadman Law Firm, P.A. can answer your questions about bankruptcy after divorce. Call us today.