Getting Divorced and Filing Bankruptcy
Divorce is cited as one of the primary reasons people file bankruptcy. In our modern society, families are often held together financially by two incomes. If the cash flow suddenly gets cut in half because of divorce, many individuals simply cannot maintain the debt payments that are part of the property settlement.
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Joint vs Individual Filings
Many people who are considering filing for divorce and bankruptcy have questions about which they should do first. It is an important issue that you should discuss with an attorney before making a decision.
Couples may choose to file bankruptcy as a family, prior to their divorce judgment. In most cases, the divorce will be held up until the bankruptcy proceedings are complete and the final disposition of the debts has been settled. Individuals often choose to file bankruptcy following their divorce judgment, only to discover that certain marital debt or obligations that are part of the judgment or settlement are not allowed for discharge under Chapter 7 or reorganization under Chapter 13. In general, monthly child support obligations cannot be included in the filing. Spousal maintenance arrears cannot be eliminated by Chapter 7, but may be included as part of a debt reorganization plan under certain conditions.
There Are Many Factors to Consider
In some cases, it is less expensive to file bankruptcy jointly. If a couple jointly acquired their debts, filing jointly may be a way to resolve the situation fairly. If one spouse caused the debts, perhaps he or she should file individually.
One benefit of waiting to file until after the divorce is that the parties will each have lower incomes when they are single. This may allow each person to meet the income requirements of Chapter 7 so he or she can file Chapter 7 individually instead of Chapter 13. However, you must consider the marital assets and the property division before making that decision.
You may want to file bankruptcy before your divorce settlement is finalized. Each case is unique, however, so it is best to discuss your situation with a bankruptcy lawyer before taking action.
Learn more about how divorce will affect your bankruptcy filing and how filing bankruptcy can affect your divorce. Talk to Illinois bankruptcy attorney Chad Hayward at the Law Offices of Chad M. Hayward. We offer a free initial consultation to evaluate your situation and provide a sound, clear explanation of your options. At The Law Offices of Chad M. Hayward, P.C., we have counseled many couples and individuals who are going through divorce and bankruptcy simultaneously. We understand that this is an especially stressful time for you and will work hard to resolve your bankruptcy issues.
If you are ready for a fresh start, we are ready to help. Illinois bankruptcy attorney Chad Hayward represents clients in the Chicago metro region and communities throughout Illinois.
The Chicago bankruptcy lawyer you hire will make a difference in the outcome of your filing. Reach us to schedule an appointment at any one of our local community offices by calling 312-867-3640 or toll free 844-529-2423.
You can also contact us by e-mail with a brief description of your legal problem. We look forward to helping your family get the fresh start from debt you need and deserve.