Filing Bankruptcy During Divorce
Divorce is difficult enough with going through the legal process and fees. Before or during this time period, one may face monetary trouble. As a result, the spouse or spouses wanting to divorce are bankrupt. What does one do to file for bankruptcy during a divorce? This question can be answered with the help of San Fernando Valley bankruptcy lawyers, SM Law Group.
Here at SM Law Group we have many years under the firm’s belt dealing with these types of cases. Bankruptcy is one of our specialties. If you have already retained a family law or divorce attorney, we can still represent you as bankruptcy counsel.
All of the spouse’s property–marital or community–will be discussed for the bankruptcy proceeding. Make sure that all property listed is yours in case the spouse lists the property as marital or community property. Proof is necessary. Filing for bankruptcy solo during the divorce isn’t recommended. If both parties agree, a joint bankruptcy is best. This is because it quicker, more cost efficient, and helps in both divorce and bankruptcy cases. Few assets will be exempt under bankruptcy laws if it is joint. Otherwise, any debts from the marriage will allow creditors to contact the non-bankrupt partner.
There is a term that spouses who file will be introduced known as “automatic stay”. That means, if divorce is still pending and bankruptcy is filed, divorce proceedings have to be put on hold until financial matters in the spouse’s bankruptcy case are closed and the bankruptcy courts give approval. Matters that do not involve finances will not be part of this automatic stay, so other matters pertaining to custody of children, for example, can be solved. It is not uncommon for former spouses to claim bankruptcy post-divorce. There have been some alterations to bankruptcy code which disallows the former spouse to discharge certain debts such as child support.
Filing for bankruptcy during a divorce can be a complex situation and it best to let the attorneys at SM Law Group help you navigate the process. Confirming eligibility to file for bankruptcy is the first step in the process. Be aware that joint debts may still need to be paid off if bankruptcy is not filed to wipe them out. Also, filing bankruptcy will not eliminate all debts. Chapter 7 files will not do this, but Chapter 13 may have a certain payment plan so the spouse can pay the trustee, and the trustee pays the creditors. If property is involved, the spouse will have to make payments to the other spouse in exchange for the property.
If you or someone you know is considering filing for bankruptcy while going through the divorce process, call SM Law Group today for a free consultation.