The question from today’s post is not surprisingly a question on a lot of people’s minds, including here in Colorado as well. That’s because filing for bankruptcy before or during a divorce can have a substantial impact on how both processes will move forward. And when couples factor in the financial cost of a divorce, the answer to the question above could almost certainly be yes in some cases.
This week, we wanted to talk to our readers about how a divorce could lead to bankruptcy and how filing for debt relief can actually have a significant impact on your divorce settlement in the long run.
When it comes to bankruptcy and divorce, there are a lot of factors that come into play. In a majority of cases, the cost of attorney fees is the inevitable cause for their bankruptcy petition. For others, it might happen during the process of dividing assets. For the rest, it might be a combination of attorney fees, asset division, alimony and child support that become too much of a financial drain. Whatever the reason may be, you’re not alone. Lots of couples have experienced the same thing and have received legal help in order to sort out these problems effectively.
It’s important for our readers to remember that divorce can also affect a bankruptcy petition as well. Filing jointly for bankruptcy, while it may save on attorney fees, could cause a conflict of interest for an attorney. Also, dividing debts in a divorce does not necessarily admonish the other spouse of their responsibility to the debt. Despite a divorce settlement, creditors can often choose which spouse they go after when collecting a debt.
Though both of these situations may seem hopeless, it’s worth remembering that legal assistance can always be sought. And often times, this is the best advice, especially when figuring out what your next move should be.
Source: Nolo.com, "Divorce & Bankruptcy: Which Comes First?" Baran Bulkat