Financial problems are recognized as a common factor leading to marriage troubles and divorce. When a couple’s financial situation is dire and they also plan to split up, they may want to consider filing for bankruptcy before filing for divorce. Bankruptcy Attorneys in Lawrence KS can provide legal representation during this process as well as guidance on the most suitable strategy.
Chapter 7 and Chapter 13 filings arranged by Attorneys in Lawrence KS are the usual choices, but they are significantly different. Chapter 13 creates a repayment plan for the debt load over three to five years. Chapter 7 dissolves the remainder of the debt after the couple’s assets are used to pay as much of their obligations as possible.
Filing for bankruptcy before the divorce has the advantage of protecting each person’s rights. Starting the bankruptcy process before getting a divorce also saves money on filing fees. The fees are the same for a couple as for an individual. If the spouses wait until they split up, they’ll double the amount of their fees. Those charges must be paid and cannot be dissolved through the bankruptcy.
Consider a couple with a high balance on a credit card they share. If they divorce and one person then files for Chapter 7, the credit card company can still demand the entire balance from the other individual. This is true even if the division of debts was determined in court and a judge ordered one spouse to pay the full balance. The other is still technically responsible in case of default.
The main problem would be whether the couple’s combined income disqualifies them from Chapter 7 or if they would strongly prefer the repayment option. If they would rather file for Chapter 13, they probably should wait until after the divorce. That way, it’s clear which individually is responsible for which debts in plans set up by a trustee. The two also are not still legally connected in a combined bankruptcy plan lasting up to five years. A lawyer such as Business Name can discuss the situation with the couple and shed insight into which decision would probably be best for their particular circumstances.
