What Happens If You Declare Bankruptcy While Filing For Divorce?

If you and your spouse have decided that divorce is your best option, and sometimes it is your only option, your finances will likely be impacted quite dramatically. Divorce, as you might expect, Is the most commonly cited cause for bankruptcy in the United States. You may be wondering what happens if you declare bankruptcy while filing for divorce? Don’t worry, the Law Offices of Patrick L. Cordero are here to help Here’s what you need to know

Bankruptcy And Divorce

If you're wondering whether or not filing for bankruptcy Will affect your pending divorce case the answer depends on how you approach It In some states, a final divorce decree which describes the distribution of assets and related matters may supersede the bankruptcy code With regards to transfers of properties Although filing for bankruptcy will not affect your trying to establish child custody or spousal support, one should consult With an experienced bankruptcy attorney before taking the steps of proceeding in a divorce matter

Automatic Stay And Property Division

When you file for bankruptcy, you are taking steps to protect yourself from collectors, lawsuits, garnishments, seizures of property and so on Depending on what chapter you file on, either Chapter 7 or Chapter 13, Will determine as to what happens to your property Most of the time, if done correctly and according to the bankruptcy laws, you can protect most, If not, all your properties Filing for bankruptcy has an Immediate Impact Bankruptcy Will trigger an automatic stay, in other words, all collection matters and lawsuits are "frozen" and your protection goes Into effect, which Will prohibit any and all actions to obtain or exercising control over property of the bankruptcy estate This includes proceedings to diVide property of the estate during divorce Usually, the speCIfics of how your bankruptcy Will affect your divorce depends on whether you file for Chapter 7 or Chapter 13 bankruptcy

Chapter 7 Bankruptcy

When you file for personal bankruptcy, whether It be Chapter 7 or 13, a trustee Will be assigned to administer your case The trustee In a Chapter 7 Bankruptcy case has the power to sell any/all of your nonexempt property to help pay the debt you owe to your creditors This means that if you file for bankruptcy during your divorce, the trustee Will have to determine which of your assets are property of the estate and whether they should be sold to pay your creditors If you and your ex Recently own property together the trustee might, in some cases, be able to sell the entire asset if you can't exempt the value of your interest in the property If the trustee determines that your ex-spouse's interest in the property Is not part of your bankruptcy estate, the trustee would pay your ex the value of his or her Interest from the sale proceeds But as you can Imagine, this has been known to complicate divorce cases and as well as cause major delays

Chapter 13 Bankruptcy

The trustee in Chapter 13 bankruptcy doesn't sell your property to pay your creditors Note that the amount you must pay to the Court depends on what type of plan you file In other words, what are you trying to do? Usually you pay back based on your intent or the finanCIal p03ition you are in At times, you are paying very little to the unsecured creditors because most of the payments to the Court is trying to save a home It is not complicated, but you need to disclose to your attorney your finances so he or she can file a proper plan that sets your needs and concerns Payment plans under Chapter 13 Bankruptcy typically take three to five years to complete which is why, if you're getting divorced at the same time, you or your spouse needs to obtain special permission from the court to continue dividing up your properties This is done more to protect you and your assets

Custody And Support Exceptions

Keep in mind that automatic stay(s) cannot stop the legal establishment of child custody or support Filing for bankruptcy Will not impact who gets custody of your children or whether either spouse Will have to pay child support

A Final Word Of Advice

You should always be aware of all of your rights With regards to family law and bankruptcy If you are involved directly or indirectly in both, be careful about which legal process you choose to take care of first If, for example, you and your spouse are on amicable terms, it may be best to first file bankruptcy. If you and your former spouse can agree to file for bankruptcy together first then you can share the cost of attorney and filing fees which could protect you both from incurring debt If you are going through a divorce With debt spiraling out of control, it's time to contact the largest consumer bankruptcy filing firm in Florida We are here to make sure you're properly educated about bankruptcy and to help you build a strong financial foundation Call the Law Offices of Patrick L Cordero for a free consultation today at (305) 267-3376.