Divorce is a difficult experience. It doesn’t matter who you or, nor if your marriage was difficult. Divorce is just plain hard no matter the circumstances. But going through a bankruptcy at the same time can seem impossible when you’re already this tense.
Thankfully, it’s actually a bit easier than it sounds on paper. There are different types of debts involved in a bankruptcy but they don’t all come into play with your divorce and so the amount you need to worry about isn’t as large as it seems. What’s even more incredible is that bankruptcy might even make your divorce a little easier in the long run.
Can Filing for Bankruptcy Make My Divorce Easier?
One of the more tedious and stressful parts of a divorce is the division of assets and debts. It’s common to hear people referring to their partner as getting half of their stuff when getting divorced. This isn’t exactly the case, as it implies that the division of assets and debts is half and half between both partners.
The truth is a little more complicated. Florida follows the law of equitable distribution. This is what is meant by the above reference. This law means that the debts and assets of a married couple are distributed fairly between the two partners during the divorce. But fair here doesn’t actually mean half and half. Rather it takes into account things such as income so that if one partner makes a lot of money while the other doesn’t work then the partner that doesn’t work won’t get straddled with debt that they can’t pay. The person with the higher income would receive more of the debt.
But the easiest way to minimize the amount of debt there is to take into account is to eliminate the debt in the first place. Filing for bankruptcy can reduce the overall amount of debt (and assets) that one of the individuals has and thereby make the process of division easier.
Should I File for Bankruptcy Before or After My Divorce?
Your specific circumstances will be necessary to determine whether it is better to file for bankruptcy before or after your divorce but an example will go a long way in helping you decide which is best.
A couple are getting divorced after a number of unhappy years together. They go ahead and file the divorce and it is finalized. Half of the marital debt is given to the first party and the other half to the second party. The first party then files for bankruptcy and the bankruptcy discharge provides them with relief from unsecured debts. These would include the debts from the marital settlement agreement that came out of the divorce. Creditors would not be able to collect from the first party and so it would fall on the second party to be responsible for the entirety of the debts. The second party would need to file a civil suit against the first party in order to get their half of the funds back.
But if both parties filed for bankruptcy together as a couple before the divorce then the bankruptcy would protect them both from creditors. In this case, no one party gets stuck having to pay the entire debt on their own. The couple can then get divorced without worrying about the debt. However, it is important to note that it is possible to revive a debt that was discharged by agreeing to pay for it in the divorce settlement. It’s always best to speak to an attorney about this possibility prior to taking action.
It gets a little more complicated when domestic support obligations are taken into consideration. These are joint debts which one party can assume during the divorce and they limit the effectiveness of future bankruptcy claims.
What are the Types of Debts Involved in Divorce?
A married couple is bound to incur a variety of debts. Some of these are individual debts which only affect one of the parties while others affect both parties. Not all of these debts are split during a divorce but each of them is important to consider when it comes to filing for bankruptcy. The various types of debts are listed below:
- Premarital Debt: These are debts that one of the parties had prior to getting married. In Florida these debts are not split between the parties during a divorce and so they are important in bankruptcy but not in your divorce proceedings.
- Non-Marital Debt: These are debts which are in the name of only one of the spouses. But being in just one name doesn’t necessarily mean they aren’t counted in the divorce. These debts may still be split if both parties benefit from them. If it only affects one of the parties then they are left out.
- Marital/Joint Debt: These are the debts that Florida is primarily concerned with when it comes to divorce. Debts which are in both parties’ names are almost universally considered to be marital debts but those debts in one party’s name that both parties benefit from would also fall under this category. This debt is divided in a ratio depending on the circumstances around the debt. For example, if the first party had poor money management skills and kept causing the couple to fall into debt then chances are they’ll be required to pay a larger portion of the debt in the settlement.
How Can I Get Help With My Divorce AND my Bankruptcy?
Divorce is complicated. Filing for bankruptcy is complicated. Mixing the two together is a recipe for a headache all around. It might feel like there’s no hope to be had.
But that’s where a great attorney comes in. Wading through the legalities of divorce and bankruptcy are tough, so why not get an attorney to walk you through it? An experienced bankruptcy lawyer will be able to help you come up with a plan of action that minimizes the stresses so you can get on with your life. We happen to know where you can find some great attorneys, so why not give us a call at (954) 566-5678 to see how we can help you today.