Brandon, Fla. – When a spousal bankruptcy adds another layer of difficulty to an upcoming divorce, it is best to get an experienced lawyer involved. If only one spouse declares bankruptcy it must be very clear who is responsible for which finances. Spouses who have most of the debts in his or her name can file more easily than if debts are in both names.
It is important to clearly know what belongs to each spouse and what is considered marital property. The divorce proceedings will outline which spouse is responsible for each asset, debt, bill and property. Many individuals have found that if they do not declare bankruptcy with their spouse, they could be responsible for some of these bills. And if any inheritances are expected in the near future, these must be factored into the bankruptcy.
“Bankruptcy can give the individuals a fresh start financially,” said Laurel Tesmer, Brandon bankruptcy and family law attorney. “Doing a bankruptcy before a divorce can make the process smoother and less expensive.”
Bankruptcy should be completed before a divorce and joint credit cards, homes and mortgages, and asset exemptions do increase by filing together. Bankruptcy will eliminate loans that are a big burden, such as car loans or home mortgages in real estate markets that are underwater.
Chapter 7 bankruptcy will eliminate unsecured debt in about 90 days and resolve debt issues. To qualify for Chapter 7, individuals must show they cannot make even partial repayments to creditors. On the other hand, Chapter 13 bankruptcy will make both spouses responsible for the repayment plan for a period of three to five years. It can prevent the division of assets some spouses would want by selling them.
Overall, a bankruptcy before the divorce can prevent costly and stressful delays. It is important to keep in mind that filing a bankruptcy before a divorce can have negative effects as well There is the potential that one spouse, if filing after the divorce, could meet the income requirements to file a Chapter 7 bankruptcy which does not require a repayment plan. If both spouses are to file together then both incomes are counted and this often puts them into a joint Chapter 13 bankruptcy. Additionally spouses will have to consider that in filing a joint Chapter 13 bankruptcy, they will be committing to a joint Chapter 13 payment plan for the next five years.
Whichever version of bankruptcy is filed will grant an automatic stay that will guard against any collection activity, including harassing calls from collection companies, garnishments and foreclosures. An individual’s credit score will drop but with future years of being able to not have a mountain of debt and more savings can increase a credit score after bankruptcy. It is paramount to pay all bills on time after a bankruptcy and open up secured credit lines over time to re-establish credit.
“We are ready to advise clients on what is the best way to proceed from a bankruptcy to a divorce,” Tesmer said. “This is one of the most difficult experiences in life and individuals deserve to know all their options and how it will affect their future.”
O. Reginald (“Reggie”) Osenton is the Owner and President of Osenton Law Offices, P.A. If you need a Brandon bankruptcy lawyer, Tampa bankruptcy lawyer, or Tampa bankruptcy attorney, call 813.654.5777 or visit Brandonlawoffice.com.