Bankruptcy and Divorce

If you think that you and your partner are headed for a divorce, and you both have a lot of debt between yourselves, then it might be a positive idea to decide to file for bankruptcy before you begin to actually file for a divorce. This will make it possible to pave the way in order for the divorce to be able to proceed far more easily due to the fact that it will allow you to get rid of some of your debt and to clear the way for a clean break. If you care able to file for bankruptcy, then you will be able to have a better idea of how to deal with the debts that do remain between the two of you. It will also imply that if your ex files for bankruptcy later on, you can nevertheless be very well protected because you will be able to take care of your debts before the divorce even starts.

The way bankruptcy functions is rather simple. When one or both of the spouses decide to file for bankruptcy, all of the property that has been shared by both of them will become a part of the estate and will then be available in order to make it possible to pay for the debts. This will also signify that you will have been granted an automatic stay, which will mean that the creditors won’t be able to hound you for any money. Don't forget that this stay won't prevent you from obtaining any spouse or child support from your ex. The next thing that will occur is that the bankruptcy court will decide what shared property will be exempt from the bankruptcy, meaning that it won't be able to be sold in order to pay for your debts. Consequently, the divorce court will be able to divide that property between you and your ex spouse.

If you are attempting to negotiate any kinds of property settlements, and also going through some kind of bankruptcy procedure, you will have to deal with some very complicated issues. Some of the debts that might be related to a property settlement might not be wiped out during the bankruptcy, so you will still need to pay them back. However, these debts can also be wiped out if you can show that you cannot pay the debt and still take care or yourself or your children, or that if you wipe out the debt it is going to be better for you than the harm that would be done to the people that you owe by not paying it.

This implies that if you think that your spouse is going to consider filing for bankruptcy after the divorce is finalized, you will need to make absolutely sure that your finances are squared away so that you aren’t going to be faced with any more debts in the future.

Article Source: http://www.debtfinancearticles.com.

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Elliott Dawson is a contributing real estate editor at http://www.debtfinancearticles.com/. This article may be reproduced provided that its complete content, links and author byline are kept intact and unchanged. No additional links permitted. Hyperlinks and/or URLs must remain both human clickable and search engine spiderable.