Divorce often leaves people in a terrible financial state. Not only are their two households now run with one income, but all the fees associated with divorce need to be paid. Nearly 50 percent of women with children will file for bankruptcy following a divorce.
Some states will hold both parties responsible for part of the former spouse’s debt. And if the former spouse files for bankruptcy, the creditors may come after you for payment. A divorce judgment does not protect you from premarital liability.
Filing Bankruptcy During a Divorce
If a husband or wife files for bankruptcy during a divorce case, there is an automatic stay on the divorce proceedings. The divorce court will not make any rulings on property or alimony issues until the bankruptcy court gives permission to do so. If you have an order for alimony or child support before your spouse files bankruptcy, they will still be legally obligated to comply with the order.
Bankruptcy Before Filing for Divorce
Before filing for divorce, a couple may choose to file jointly for bankruptcy saving money on filing fees and could possibly wipe out most if not all of their debt. Chapter 7 will liquidate the marital assets, and the creditors will be paid from the proceeds. This type of bankruptcy takes two to four months, much less time to complete than chapter 13.
If one of the parties wants to keep some of the marital assets they might consider Chapter 13 bankruptcy to reorganize their debt. Chapter 13 bankruptcy requires both parties to agree on and continue to make court approved payments for three to five years. This may be difficult for people who are getting divorced.
If money troubles are coming between you and your spouse and a divorce is in your near future. Agreeing long enough to file bankruptcy together can give you both a fresh financial start. Contact a Cincinnati bankruptcy attorney to discuss your best options of getting out of marital debt.