Marital problems and financial issues often go together. When a marriage is crumbling, damaging financial choices are often made out of necessity or just simple confusion. Likewise, when a couple’s finances are in trouble, it can cause great strain on the marriage.
Bankruptcy is available as a way to resolve the financial issues you are facing. In a bankruptcy, a federal court judge decides that some of your debt should be discharged (wiped out) so that you can have a new start with your financial life. Bankruptcy has some important implications on a divorce that you should understand.
Because bankruptcy filing fees are the same whether you file as an individual or as a couple, filing before you get a divorce may save you some money because you’ll pay only one set of fees. Filing while you are married will simplify your divorce later, because there will be less debt to divide as part of the divorce itself. If you have a lot of assets, filing separately may mean you can each take the allowed bankruptcy exemptions for property, possibly increasing the total amount that is kept, but it is important to discuss your options with your bankruptcy attorney.
If you get divorced and then later decide that you need to file for bankruptcy, it is essential to understand the way in which a bankruptcy will impact you. Bankruptcy does not discharge child support or unpaid child support obligations. Spousal support or alimony is also not dischargeable in bankruptcy, so you will still be responsible for these family obligations after your bankruptcy. Often debt obligations in a divorce decree are not dischargeable in Bankruptcy. If your divorce decree requires you to pay a third party on behalf of your spouse (for example a mortgage company) and defines this payment as alimony or in the nature of support, this type of debt will be dischargeable in bankruptcy.
The Sampair Group offers advice in your divorce or family law case in the Mesa or Glendale areas of Arizona. Our attorneys are here to help you. Make an appointment with us now.