Debt can often place extra stress on a relationship and this can regularly lead to problems when it comes to managing civility in your relationship on a day-to-day basis. After months or even years of stressed finances, you may find it easier to deal with your debts on your own and separate through a divorce. If you’re considering divorcing your spouse to address your debts on your own it’s important on how this will affect your chapter 7 bankruptcy or Chapter 13 bankruptcy case.
Under Chapter 13 Bankruptcy
If you’ve already filed for chapter 13 bankruptcy and you’re considering getting a divorce during the bankruptcy proceedings, keep in mind that this will affect the equity that you have in your home. If you decide to move out of your marital home or file for divorce during a bankruptcy your bankruptcy exemptions may be lost. If your marital home is being sold, your share of the equity from your home is likely not going to be protected and a bankruptcy trustee may use the money to pay back your creditors. A chapter 13 sees a minimum of three years commitment so it may be best to file individually and get a divorce before bankruptcy. If you think it will be too difficult for you to stay together for another 3 to 5 years, the divorce case can be wise.
Filing For Bankruptcy After a Divorce
If you’ve just experienced a divorce, it may be easier for you to apply for Chapter 7 bankruptcy because it may be easier for you to qualify for a means test as an individual. Under Chapter 7 bankruptcy means tests, you and your spouse’s household income will be calculated. It may be easier for you to proceed with the means test after a divorce for Chapter 7 instead of a chapter 13 bankruptcy.
If you’re receiving spousal support these payments will be considered income as part of a means test for Chapter 13 or Chapter 7 bankruptcy. As debts are often incurred throughout divorce, it’s important to time your bankruptcy accordingly to make sure that you can receive a bankruptcy discharge and secure your own assets from the bankruptcy.
If you’ve just divorced or you are considering a divorce and bankruptcy at the same time, contact us today and we can guide you through the process.
This post was written by Trey Wright, one of the best bankruptcy lawyers in Tallahassee! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.
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