Divorce and bankruptcy are two profound life events that at times, can intersect with one another. It is common for people to end up with debts that they are not able to afford on their own following a divorce. People who are already working hard to pay their bills may experience financial stress as a result of credit card debt and large medical bills. Strategizing in a way that makes sense for you and your future with a legal consultation that includes both your divorce attorney and a bankruptcy attorney.
Bankruptcy: Difference Between Chapter 7 and Chapter 13
There are two common types of bankruptcy, Chapter 7 and Chapter 13. When bankruptcy comes to mind, most people think of the slate being wiped clean of all debts they have. You must be able to meet the means tests and the income qualifications in order to qualify for Chapter 7. Chapter 13 is the option if you make too much money to qualify for Chapter 7. Chapter 13 allows for you to repay portions of your debt over several years.
Divorce and Bankruptcy at the Same Time
People going through a divorce commonly ask bankruptcy attorneys how filing for Chapter 7 or Chapter 13 will affect the bankruptcy. As husband and wife, you may choose to file for bankruptcy jointly or individually. Whether you are married or divorced, your bankruptcy will not be impacted by your marital status once you file for bankruptcy. You bankruptcy attorney can file a motion based on your ability to pay to modify your payments if you are unable to make your scheduled Chapter 13 payments to the bankruptcy trustee.
Bankruptcy Before Divorce?
It may be in your best interest to go through the bankruptcy process prior to divorcing and dividing marital assets. If one or both of you file for bankruptcy you will share the obligations and responsibility to your creditors with jointly.
Divorce can be a complicated process, working with a reliable and experienced attorney will prove to be beneficial. It is likely that you will hire two attorneys two handle these issues, a divorce attorney and a bankruptcy attorney. Your attorneys can work together to consult around your finances and the details of your divorce and the Arizona divorce process in order to make a plan that is in your best interest.
Thanks to our friends and contributors from Hildebrand Law for their insight into divorce.