A divorce can be a financially and emotionally devastating process, and an ex-spouse’s bankruptcy can add stress because it negatively affects the other person’s financial stability. Bankruptcy and divorce can affect someone’s finances in multiple ways depending on the filing spouse’s new circumstances. Read on to learn more on how a Bankruptcy Attorney In Puyallup Wa can help clients understand the relationship between bankruptcy and divorce.
The Purpose of Bankruptcy
In bankruptcy, court intervention provides borrowers with an orderly way to manage debt. An individual can file under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. Chapter 13 is a repayment plan, and Chapter 7 discharges most debts. Once the petition is filed, an automatic stay forces creditors to stop all collection attempts. Below are several things to consider when going through bankruptcy and divorce at the same time.
Cosigned and Joint Credit Obligations
If an ex-spouse files for bankruptcy, the other spouse is responsible for the debt if it’s cosigned or jointly owned. Creditors don’t care what a couple’s divorce agreement says-;the other person is still responsible for the debt even if an ex-spouse refuses to pay. However, a divorce agreement can force the other person to take on a greater share of the debt. Consult a divorce lawyer and a Bankruptcy Attorney In Puyallup Wa to discuss legal options.
Spousal and Child Support
According to the 2005 Bankruptcy Abuse and Consumer Protection Act, child and spousal support payments must be made before any other creditor is paid. Although spousal support is not a dischargeable debt, this doesn’t mean a receiving spouse will get the same amount as they got before the other spouse’s bankruptcy. In most instances, spousal support can be modified if the filing spouse requests it, and a new support agreement will be based on the bankruptcy petition. Contact a bankruptcy or divorce lawyer to learn how bankruptcy can affect support payments.
Addressing these areas can help a client protect his or her financial stability. For more information on the relationship between bankruptcy and divorce, consult a local bankruptcy attorney today. Visit the website or call to set up a free consultation.
