Financial disasters often cause stress and disrespect which leads to bankruptcy and divorce. In fact, I get asked a lot of questions about the intricacies of bankruptcy and divorce in Louisville, Kentucky. People often file for divorce and then file for bankruptcy. However, people also reverse this order and first file bankruptcy and then divorce.
Regardless of how it happens, studies show you can actually be better off financially by properly filing your bankruptcy and getting the maximum effect. Moreover, with bankruptcy, you discharge the debt and keep the assets.
Bankruptcy and Divorce in Louisville Kentucky
Interestingly, you can’t discharge child support or alimony in bankruptcy. But, you can make child support, alimony, and life more affordable by filing a Chapter 7 or Chapter 13 Bankruptcy. By discharging less important debts like credit cards and medical debt, you can ensure that you pay alimony or child support. Or, you can also stop a foreclosure.
Additionally, if you are still married, you may be able to file a joint petition. However, if you can’t work together, you can still use bankruptcy to make life affordable or to save property. Even if you can’t agree on anything else, you may have to agree to file bankruptcy.
⎆ When to file joint or separate bankruptcy petitions.
When you can file jointly it costs you less. But, you may want to file separate petitions. Also, if the bankruptcy includes a foreclosure, filing one bankruptcy prior to the sale stops the sale. Filing a second bankruptcy stops the sale again giving you six or more additional months in the home before it finally sells. This is when people should plan together for what is best for everyone. Unfortunately, some couples can’t always work together even if children are involved.
⎆ Paying child support or alimony through a Chapter 13.
If you owe back child support or alimony, you can pay it through Chapter 13 at the expense of unsecured and sometimes even secured creditors. Child Support and Alimony are priority debts and they are paid before the house, car, and unsecured debts are paid in bankruptcy.
By paying child support and alimony through Chapter 13 you can force the medical and credit card debt to be paid at as low as zero percent. Chapter 13 payments are voluntary because you can quit Chapter 13 at any time. But you can set it up to deduct the payments from your paycheck to ensure child support and alimony are paid in a timely manner.
⎆ Filing before and after a divorce.
While a marriage still exists between a couple, they might want or need to resolve their debt problems together. Resolving debt problems after the divorce is less likely to work because you are less likely to work together to tackle problems. Often the divorce leaves one of the partners less able to afford a home. These divorce-related foreclosures and bankruptcy cases are common.
Problems with bankruptcy and divorce also happen when your spouse files bankruptcy after the divorce. When the spouse files bankruptcy the burden of the debt often shifts to the non-filing spouse. So, it often forces the other spouse to file. Also, a spouse can file Chapter 13 and not repay debts. Even when the marriage settlement agreement said a spouse should repay a debt – a Chapter 13 may cancel an obligation to pay the debt to a former spouse.
Resources for Bankruptcy
Louisville Kentucky Bankruptcy Forms
Other Related Information
Non-dischargeable Debts in Bankruptcy
How Bankruptcy Affects Spouse, Job, Credit, and Cosigners
Self-Help Resources for Rebuilding Your Life After Bankruptcy
Finishing a Chapter 13 Plan and Getting a Complete Discharge
