With all marriages in America ending over 50% of the time, and bankruptcy rates rising as the economy looks to tank into yet another recession, it's no wonder more people are curious about what happens when you declare bankruptcy during a divorce proceeding. There's no denying that declaring bankruptcy throws your finances into temporary chaos - add divorce on top of that, and it's plain to see why soon-to-be ex-spouses should seek the advice and guidance of a highly qualified bankruptcy lawyer.
So just what happens if you declare bankruptcy during a divorce proceeding - and how can you ensure that your assets are protected?
First, many people think that it's wiser to wait until after the divorce proceedings to declare bankruptcy, as it's easier to separate the two legal headaches. However, bankruptcy experts recommend doing both at the same time for the following reason: it significantly shrinks the amount of debt you and your partner will have to divide during the divorce.
When you declare bankruptcy during the divorce proceeding, a bankruptcy court will immediate sell off all of your assets that you purchased with your spouse. This is in compliance with a Chapter 7 bankruptcy filing, which means that your house will usually be protected from the liquidation. An automatic stay will also be declared, which will protect you and your soon-to-be ex-spouse from being harassed by creditors eager to collect on their debts.
During the course of the bankruptcy proceeding, all jointly owned unsecured debts will be discharged; however, any resulting alimony and child support payments will not be discharged, as they're federally exempt. Near the end of your bankruptcy petition, the assets that are not jointly owned will be divided up between you and your spouse or restored to you (this depends on your state's laws). This means that your divorce will be much less complicated, as you'll have a significantly decreased amount of unsecured debt to deal with when filing for divorce.
However, there are special circumstances that you'll need to keep in mind while declaring bankruptcy and divorcing your spouse at the same time. For example, if your spouse was awarded certain property and is considering liquidating that property to settle his or her debts, you can file a petition to become a lien holder against the property. This means that if your spouse decides to declare bankruptcy, the property will become yours. There are other special considerations that come along with declaring bankruptcy and getting divorced, so be sure to consult with a divorce attorney and bankruptcy attorney to ensure that things go smoothly.
Let's face it: the last thing you want to deal with during a divorce proceeding is dealing with a pile of shared debt with your soon-to-be ex-spouse. A bankruptcy attorney can help you whittle down that debt into a much more manageable pile, leaving you free to continue the divorce proceedings with a much smaller headache.
Reed Allmand, sponsoring attorney for Bankruptcy.net, is constantly looking for ways to provide the best financial information for his clients. Whether you are considering filing for bankruptcy, or are currently going through a Chapter 7 or Chapter 13, visit http://www.bankruptcy.net for up to date news and information you need to know.
By Reed Allmand
So just what happens if you declare bankruptcy during a divorce proceeding - and how can you ensure that your assets are protected?
First, many people think that it's wiser to wait until after the divorce proceedings to declare bankruptcy, as it's easier to separate the two legal headaches. However, bankruptcy experts recommend doing both at the same time for the following reason: it significantly shrinks the amount of debt you and your partner will have to divide during the divorce.
When you declare bankruptcy during the divorce proceeding, a bankruptcy court will immediate sell off all of your assets that you purchased with your spouse. This is in compliance with a Chapter 7 bankruptcy filing, which means that your house will usually be protected from the liquidation. An automatic stay will also be declared, which will protect you and your soon-to-be ex-spouse from being harassed by creditors eager to collect on their debts.
During the course of the bankruptcy proceeding, all jointly owned unsecured debts will be discharged; however, any resulting alimony and child support payments will not be discharged, as they're federally exempt. Near the end of your bankruptcy petition, the assets that are not jointly owned will be divided up between you and your spouse or restored to you (this depends on your state's laws). This means that your divorce will be much less complicated, as you'll have a significantly decreased amount of unsecured debt to deal with when filing for divorce.
However, there are special circumstances that you'll need to keep in mind while declaring bankruptcy and divorcing your spouse at the same time. For example, if your spouse was awarded certain property and is considering liquidating that property to settle his or her debts, you can file a petition to become a lien holder against the property. This means that if your spouse decides to declare bankruptcy, the property will become yours. There are other special considerations that come along with declaring bankruptcy and getting divorced, so be sure to consult with a divorce attorney and bankruptcy attorney to ensure that things go smoothly.
Let's face it: the last thing you want to deal with during a divorce proceeding is dealing with a pile of shared debt with your soon-to-be ex-spouse. A bankruptcy attorney can help you whittle down that debt into a much more manageable pile, leaving you free to continue the divorce proceedings with a much smaller headache.
Reed Allmand, sponsoring attorney for Bankruptcy.net, is constantly looking for ways to provide the best financial information for his clients. Whether you are considering filing for bankruptcy, or are currently going through a Chapter 7 or Chapter 13, visit http://www.bankruptcy.net for up to date news and information you need to know.
By Reed Allmand
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