What to Know Before Filing for Bankruptcy in Advance of Divorce

Filing for bankruptcy and filing for divorce share a few things in common: they can represent stress, anxiety, confusion, and depression. After all, the reason why married couples divorce is because the marriage has not worked out, and the reason for filing bankruptcy is that one’s finances are in disarray. Neither bankruptcy nor divorce occurs when things are going well. Though you may already have a lawyer to represent you in divorce proceedings, you may be best served by having a bankruptcy lawyer who can represent your best interests from an asset and property perspective. Filing for a divorce or bankruptcy is a legal process and it is binding. This makes it essential that all of your legal i’s and t’s are dotted and crossed.

In advance of talking to legal counsel, here are a few points that are important to understand when it comes to divorce and bankruptcy.

Bankruptcy Does Not Include All Manner of Debts

Though you may choose Chapter 7 for the type of bankruptcy to file, it does not allow all types of debts to be included in the discharge process. In fact, the types of debt that are classified as non-dischargeable cannot be eliminated and the debtor is still obligated to pay them. After a review of your debts, your chapter 7 bankruptcy lawyer in Waterbury, CT can confirm which ones are dischargeable. Those which are not dischargeable include the following:

  •         Child support
  •         Spousal support (also known as alimony)
  •         Student loans
  •         Lawyer fees for child support or child custody cases
  •         Court fees, including those for penalties and fines
  •         Fines assessed by government agencies

Common Reasons for Why the Court Might Deny a Debt Discharge Request

In addition to those types of debts that are considered non-dischargeable, your bankruptcy lawyer may caution you that if you do not comply with the Chapter 7 bankruptcy court requirements, the court may respond with a denial of your debt discharge request. Here are some of the most common ways in which this occurs:

  •         The debtor failed to provide the court with the tax documents that were requested
  •         The debtor intentionally hid assets or property and thus did not declare them to the court in order to defraud their creditors
  •         The debtor committed perjury during bankruptcy proceedings
  •         The debtor violated a court order
  •         The debtor failed to undergo a court-required credit counseling course

If You and Your Spouse Jointly Hired a Divorce Attorney, You Must Hire Separate Attorneys

Generally speaking, this only holds true if you undergo bankruptcy proceedings in the midst of your divorce. This is because if you share the same divorce attorney, it would be a conflict of interest because the attorney’s become opponents in the context of the simultaneous bankruptcy proceeding. As result, one or both of you must terminate the shared divorce attorney and hire your own bankruptcy attorney. This will increase the legal costs for each of you.

Before proceeding with the divorce or the bankruptcy process, consult a bankruptcy attorney in addition to your divorce lawyer for insight as to the best way to reach the outcome that you desire.

 


 

Thanks to The Law Offices of Ronald I. Chorches for their insight into bankruptcy law and filing for divorce.

Close Menu