One of the most commonly reported causes of debt and the filing of bankruptcy cases is divorce. No matter what a married couple’s financial situation is before a divorce, the legal, emotional, and physical process of ending a marriage wreaks havoc. If you’ve worked through a divorce and find yourself facing serious debt, you are not alone. Divorce is one of the most difficult life changes in many ways, including having a significant impact on your finances. Divorce typically splits savings and properties between spouses, legal fees and attorney costs can be high, child support payments are required from the spouse that does not gain custody of any dependents in the marriage, and alimony payments are generally assessed against one party in the divorce as well. All that said, it’s not surprising that post-divorce finances can be complex and burdensome. If you’re looking for debt assistance in Owatonna, MN after a divorce, Behm Law Group, Ltd. can provide legal support and protection throughout a bankruptcy case. Our skilled attorneys will handle your case with care, expertise, and sensitivity from start to finish.
Most attorneys will recommend waiting to file for bankruptcy until after a divorce is finalized or filing jointly as spouses before a divorce is started. This is largely because of the complexities of overlapping state and federal legal procedures and the significant costs with filing two different legal proceedings at the same time.
However, if you need to use bankruptcy for debt assistance after a divorce, you won’t need to worry about the overlap or going through two complicated legal processes – divorce and bankruptcy – at the same time. If you aren’t filing jointly with your spouse, it’s likely you’ll qualify for Chapter 7 bankruptcy. Those eligible for Chapter 7 have income-to-debt ratios below the state median or average income for a household of a similar size.
Chapter 7 works to liquidate non-exempt assets in exchange for debt discharge. Filers are allotted several bankruptcy exemptions that protect the equity or value they have in their home, car, furniture, and household appliances and many other assets from the liquidation process. In the vast majority of chapter 7 bankruptcy cases, the only things people lose are their burdensome debts.
Why Divorced Spouses Will Qualify
- If you have custody of your children, you have to support them with a lower income than when you were married. This situation means divorced spouses often resort to being more dependent on credit cards and other forms of borrowing.
- The spouse that did not gain custody of the children of a marriage may be required to pay alimony and child support. Though they only support themselves in their household, there are many new financial obligations in their lives that result from a divorce.
- Divorced spouses may lose health insurance that they otherwise had through their ex-spouse’s workplace. If they don’t qualify for state-supported programs, they may have significant trouble paying for health insurance or medical bills.
Chapter 7 will not allow the discharge of certain debts involved with divorce, like alimony and child support, but it will discharge many other debts, including medical bills, credit card debt, foreclosed mortgages, bounced checks, checking/savings account lines of credit, past due utility bills, loans concerning repossessed vehicles and many other loans.