Posts

What Happens To Support Obligations Through Bankruptcy?

It has been said the number one cause of marital struggle and ultimately divorce is money. So, it goes without saying that divorce and bankruptcy often times go hand in hand. Because gaining solid financial footing after a divorce is key to helping you move forward in your life, it is essential to understand how bankruptcy can impact support obligations and division of debt as ordered by the divorce court.

Child support is not an obligation that will be wiped out by bankruptcy. Other debt though is a different story. When you get divorced the Court will make an equitable division of property and a fair apportionment of debt. The problem that occurs when your spouse is ordered to pay joint debt and then file bankruptcy is that you are the one left responsible for the debt. In bankruptcy it works like this:

●       Elimination of debt is only for the person that files the bankruptcy. This means if your spouse was ordered to pay for a credit card that you are also on and then files bankruptcy, the lender will look to the non-filing person for repayment.

●       This is also true for secured debt obligations, such as vehicle and home loans.

The remedy in this situation is to seek a contempt citation against your ex in the divorce case itself. You can also object to the terms of the bankruptcy depending on the chapter filed, or initiate a lawsuit within the bankruptcy case to resolve the issue. These cases can be difficult and may depend on the specific language in your divorce decree. In order to make a decision on how to best proceed; seek the advice of a skilled family law attorney. We will review your case and help you to make an educated decision that works for you and fits the facts of your case.

For answers to your questions about divorce and bankruptcy, consult our office. Let us put our experience to work for you. Call The Sampair Group in Phoenix and the West Valley today to schedule your appointment.

Bankruptcy and Divorce

Mesa Divorce AttorneyMarital 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.

So You’re Marrying Someone Who Has Filed For Bankruptcy…

You have great credit, and, after they file for bankruptcy, your future spouse will have a clean slate. Many marriages end as a result of financial disagreements and poor financial decision-making. When you marry someone who has declared bankruptcy, it won’t immediately affect or damage your credit score, or render you unable to secure certain loans, but it could complicate your financial health over time. Don’t be shy about sharing the details of your finances with your future spouse in order to avoid any surprises or misunderstandings. But before you walk down the aisle, there are a few things to know about how your future spouse declaring bankruptcy can affect you:

Timing
The best time for your future spouse to file for bankruptcy is before you are married. Doing this beforehand will increase your chances of obtaining new credit as a married couple. It will also give your future spouse more time to organize their finances before combining them with yours. They can start building their credit immediately after filing.

Credit Score
Each individual has their own credit report, and getting married or divorced does not combine or divide credit. As long as you do not share accounts, you and your spouses credit histories will remain separate. If you are marrying someone who has filed for bankruptcy, you will need to maintain separate bank accounts and credit facilities to be sure that your credit is not affected. Any joint accounts you have with you spouse can reflect their bad credit, and loan applications might carry low borrowing limits and high interest rates if your new spouse’s name is attached.

Start out by working with your spouse to help slowly improve their credit. After marriage, open a joint credit card for a limit under $500, so that you are not exposed to a huge liability but at the same time are using your good credit to help their bad credit. Monitor all payments to make sure they are made on time.

In order for the joint credit card to benefit your spouse’s credit, be sure that the lender will report the new credit line to all three credit bureaus (Experian, Equifax and TransUnion). After six months to one year, your spouse can try applying for a credit card in just their name from the same lender. It is easier to do it through the same lender because they have already been periodically checking both of your credit history throughout the year. Before applying however, make sure your spouse checks if they are eligible for an account in order to avoid a credit check that could make more of a dip in their credit.

Loans
When marrying someone who has declared bankruptcy, it can be difficult to permanently keep your credit histories completely separate. Large purchases, such as buying a home, usually require both names be on the mortgage so both incomes and credit histories can be considered in evaluating the risk of the loan. If you are applying for joint credit for a loan, list the person with the best credit first on the application.

No matter what your financial situation is, both partners should be open and honest about their debts and other troublesome financial situations. Discuss the options for filing for bankruptcy and talk to a qualified bankruptcy attorney at The Sampair Group for guidance along the way. Learning the facts about bankruptcy and how it can affect your marriage is important to ensure a lifetime of financial security. 

What You Should Know Before Filing For Bankruptcy in Arizona

If you are having problems paying your debts, or are threatened with foreclosure or repossession, there are ways to deal with these problems. When faced with financial challenges, considering the decision to file for bankruptcy can be difficult. Before you make the final decision to file, it is essential to know the facts about bankruptcy and the complex process that it entails. Filing may not be the answer for everyone and is certainly in no way a “quick fix” to money problems. Here are some things to consider before making the final decisions to declare bankruptcy:

1. Wait as long as you can before filing. In Arizona, you can only file for bankruptcy once every six years, so you will want to make sure you wait to make the decision until you absolutely need it. Take time to research and consider the specifics of your financial situation. Just because creditors are threatening you for not paying your immediate civil debts (aside from fines or court ordered amounts) does not mean you should immediately file. There are other options to taking care of debt, and the best step to take first is to speak to an experienced Bankruptcy Law Attorney at The Sampair Group to discuss your options.

2. If you are worried about how your credit report will be affected, be aware that your choice to file for bankruptcy will remain on your credit report for 10 years, and your credit score will increase within one year. This won’t necessarily eliminate you from qualifying for loans, but you may be charged a higher interest rate from the lenders than if you had not filed.

3. When making the decision to file for bankruptcy, be sure that beforehand, you do not incur any more credit card debt or debt from borrowed money. This also includes loaning money to friends or family members or giving or selling property without consulting with a lawyer first. Opening a joint bank account with someone that is not your spouse can severely impact you as well before filing for bankruptcy. Lawyers at The Sampair Group also advice that you do not transfer any money between bank accounts or transfer a title on any automobiles in your name.

4. After filing, you are permitted to keep a certain amount of property including your home (with an equity under $150,000), you car (with an equity under $5,000) and personal items such as household furnishings. Investment accounts and boats or RV’s are not exempt from seizure during the bankruptcy and these assets are distributed to the creditors.

Before making the decision to file for bankruptcy, meet with an experienced, qualified bankruptcy attorney at The Sampair Group to discuss your options. Do not delay or ignore financial distress as it could result in further financial expenses that can be avoided.

You can still be on the hook for your ex-spouse’s debt after divorce

If you have just ended a marriage or are considering filing for divorce, it is important to take into consideration the following word: Debt. If your spouse has racked up any amount of debt, you can be held liable for payments, no matter whose name the debt is in.
Phoenix resident Dolores Ferguson knows exactly what this is like after discovering that she is responsible for $2,000 in payday loan debt that she says is not hers.

Even though she signed a prenuptial agreement, Ferguson still received a court order garnishing her wages.

Too often, prenuptial agreements are misunderstood. While much debt that is accrued pre-marriage is covered through the prenuptial agreement, some federal debt loans such as student loans or payday loans are not subject to these agreements. Also, if there are any joint accounts in you and your spouse’s name, you are responsible for any debt from these accounts if your spouse does not pay.

Glendale Family Law attorneys at The Sampair Group know that there are many ways to avoid being on the hook for your ex-spouse’s debt after a divorce.

The first precaution to take is to know your debt. Be organized with all of your accounts including all personal loans and major credit cards. Before any more charges are racked up, it would be best to close or freeze any joint accounts. You should also get your credit score from all appropriate credit reporting agencies so you can keep track of any unexpected changes in this score. Keep up with these credits checks to make sure no additional charges are made on frozen accounts.

Throughout the divorce proceedings, do not neglect any bills that your name is attached to, even if you make minimum payments. If you find that your ex isn’t paying any of the bills on their part even after the divorce has been finalized, you may still have to make the minimum payments in order to avoid hurting your credit. Even before the divorce is finalized, make sure everything is paid for that has your name attached to it.

Another option, while it may not seem the most appealing, is to consider is filing for bankruptcy. This will discharge most of what you owe and make it possible to clear out any debt you have that has been incurred by your spouse. It is best to do this before you end the marriage rather than several months later so it can be a joint clearing of debt. If one spouse declares bankruptcy, more often than not it means the other party will have to declare as well since any credit card companies or other debtor will come after both parties for the payment, despite any reasons for your divorce.

If you are thinking of initiating a divorce and are concerned about being responsible for your spouse’s debt, a Phoenix divorce lawyer at The Sampair Group can help you with the necessary steps for your rights during the process.