It’s very common for a bankruptcy to follow a divorce, and the legal settlements that a divorce establishes can be affected in various ways with a subsequent bankruptcy filing. While domestic support obligations, such as alimony and child support, are typically excepted from discharge in any bankruptcy filing, many other obligations incurred through a divorce can be discharged. Bankruptcy is a nuanced system that helps thousands of individuals and businesses find permanent relief from debts that they would never be able to repay. For those considering filing for Chapter 7 or Chapter 13 bankruptcy in Windom, MN and the surrounding area, Behm Law Group, Ltd. attorneys provide expert legal guidance and protection throughout the entire process. We help you construct your petition, file the necessary paperwork, documents, and forms, and navigate through all the legal requirements and court procedures.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, or wage-earner bankruptcy, is a reorganization process that restructures your debts into a three- to five-year repayment plan that is suited to your monthly income and monthly necessary living expenses. If you file for Chapter 13 after entering a divorce settlement, the particulars of that legal arrangement can be impacted in different ways.
Marriage settlement agreements are contracts that divide the assets the couple previously jointly owned among the two divorcing parties. It can also assign responsibility for certain debts that the parties incurred during the marriage. Also, it establishes and assigns domestic support requirements like alimony and child support. The domestic support obligations, such as alimony and child support, established through the divorce decree/settlement typically won’t be discharged in a subsequent bankruptcy proceeding. For various public policy reasons, the drafters of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 wanted to hyper-prioritize obligations related to child support and alimony so that such obligations would be virtually immune to the bankruptcy process.
Divorce and Bankruptcy
However, sometimes divorce settlement agreements will require one spouse to pay certain debts that were jointly incurred during the marriage and hold the other spouse harmless or immune from such debts. Also, where one spouse receives more hard assets or property than the other spouse, a divorce settlement agreement can require the spouse who is receiving more hard assets/property to pay a lump sum cash amount to the other spouse as an equalizer of sorts. These sorts of obligations sometimes can be altered or discharged in a Chapter 13 case.
To learn more about why divorce often leads to bankruptcy and how divorce settlement obligations are handled in Chapter 13 bankruptcy in Windom, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or email@example.com.