Financial hardship often causes additional strain to marriages that are already struggling. When a couple decides to end a marriage that is defined by conflict, emotional distance, and relentless creditors, their first likely thought is to file for divorce. Divorce is a complex and emotional legal process that becomes even more complicated when a couple also needs to file for bankruptcy. Unfortunately, it’s impossible to complete both legal procedures simultaneously.
A married couple can file for Chapter 7 or Chapter 13 bankruptcy to resolve their debts. Chapter 7 is a liquidation option for couples with limited income. During this process, a trustee sells a debtor’s nonexempt property to repay creditors. Chapter 7 typically takes 3-4 months to complete. Chapter 13, on the other hand, is a repayment plan that lasts 3-5 years and uses a couple’s monthly disposable income to pay their debts. The court discharges any leftover debt when either bankruptcy plan is completed.
The Main Conflict
Married couples usually complete a bankruptcy option before filing for divorce. This way, spouses can share the legal fees and avoid paying joint debts. When you file for bankruptcy, your assets and property become part of your bankruptcy estate. An “automatic stay” freezes your assets so the bankruptcy court can evaluate your debts and liquidate your property. Unfortunately, it lasts until your bankruptcy plan is completed. Property division is a significant aspect of the divorce process, and an automatic stay prevents your assets from being divided by the court.
Additional Chapter 13 Complications
You likely don’t want to wait 3-5 years to divorce your spouse. Luckily, there is an option that allows you to complete your divorce and split the bankruptcy payments with your ex. However, you’ll need to receive permission from the bankruptcy court before starting this process. Your bankruptcy and divorce lawyers will be your essential allies if you want to pursue this path. The complication, however, is that debtors often have difficulty affording their payments while maintaining two individual households.
A divorce may be the only way you can file for Chapter 7 bankruptcy. If your joint income is too high, you’ll be likely pushed to file for Chapter 13. In many cases, both spouses are able to file for Chapter 7 once the divorce is finalized because their individual incomes are below the state median. You don’t want to be put on a Chapter 13 repayment plan you can’t afford.
Hire a Bankruptcy Lawyer
Contact The Buchalter Law Group if you’re ready to file for Chapter 7 or Chapter 13 bankruptcy. Our Brevard County bankruptcy attorneys have a thorough understanding of the bankruptcy process, and have handled thousands of cases throughout the state of Florida.
We’ve been helping clients enjoy debt-free lives for over 35 years. Call The Buchalter Law Group at (321) 320-6088 to learn more!