Financial concerns before, during and after a divorce
Divorcing spouses should pay special attention to credit scores and carefully evaluate whether or not a bankruptcy may help them.
Making the choice to get divorced is not something that most Arkansas residents take lightly. The same is true when it comes to making the choice to file for bankruptcy. Both of these are major decisions and experiences and when people find themselves considering divorce and bankruptcy at the same time, it is important to understand how the two may work together.
Should I file for divorce and then worry about my finances?
When determining a final division of assets and debts in a divorce, the decree will identify which spouse is responsible for paying which debts. However, as Bankrate explains, even if a divorce settlement assigns liability for an originally joint debt to one spouse, the creditor may still pursue payment from the other person if the liable party fails to pay it.
Additionally, a debt assigned to someone in a divorce proceeding may not be able to be discharged via either a Chapter 7 or Chapter 13 bankruptcy.
According to Forbes, if people do not make the right choices about large assets and debts when getting divorced, they might find themselves forced into filing for a bankruptcy they may otherwise have been able to avoid. An example could be when one spouse keeps the marital home and assumes responsibility for the mortgage. If that person fails to make the mortgage payments, the other person’s credit can be impacted. At some point, the only option may even be foreclosure let alone bankruptcy.
So is it best to file for bankruptcy and then get divorced?
My Horizon notes that some couples are able to work collaboratively together and file a joint bankruptcy before they get divorced. This may well be best if a Chapter 7 plan is chosen because it can be completed relatively quickly. If a couple feels a Chapter 13 bankruptcy is better for their situation, things could get trickier as it may take as long as five years for this type of plan to be completed.
If a married couple files for a joint Chapter 13 plan and gets divorced a year later, that bankruptcy might need to be reworked or even cancelled. This may only add to the complications and costs involved.
How can I decide the best way to proceed?
Before deciding how to handle simultaneous financial and marital problems, Arkansas residents are encouraged to meet with an experienced attorney. This will give people the opportunity to discuss the specifics of their situation with someone who can explain the ramifications of different choices in an effort to make the best decisions possible.