By Chris Kramer
Financial stress is one of the leading factors for filing for divorce, and at the same time, divorce can create a financial crisis for a couple. Divorce can create financial hardships that push one or both parties into bankruptcy.
Sometimes the simple fact that the same amount of money must now support two households creates a financial crisis in itself. At other times, poor management of debts during the divorce process has damaged both parties' credit ratings and resulted in the accumulation of fees and interest that make debt unmanageable.
At one point, an unscrupulous party to a divorce could wait until debt and asset division and the case was decided and then file for bankruptcy, leaving the other spouse stuck with all of the debt. However, debts from a divorce are no longer dischargeable in bankruptcy.
Although a spouse is legally liable for marital debt allocated to him or her in the divorce decree, that allocation does not relieve the other spouse of obligation to the original creditor. The divorce court does not have the power to change your obligations to outsiders who are not a part of your divorce case.
When entering into an agreement with a credit card company or mortgage lender, that agreement is binding upon you. If your spouse defaults on paying the debt, and you end up having to pay, you can take your spouse back to court to get compensated and maybe even cover divorce attorney fees.
Learn more about your rights and protecting your financial future with help from a divorce attorney near you. Get in touch today by calling 877-349-1310 or filling out a divorce case review form.
Married couples can file bankruptcy jointly, while divorced couples can't. Couples who are considering bankruptcy often find it financially advantageous to file for bankruptcy protection before divorcing.
However, changes to the bankruptcy laws in 2005 made it more difficult for people above a certain income level to file for Chapter 7 bankruptcy. Some couples might find themselves unable to file for Chapter 7 bankruptcy, whereas one spouse alone might be able to do so after the divorce.
If you are considering bankruptcy and divorce or are planning to divorce and you and your spouse face significant financial difficulties, consult with a divorce lawyer and a bankruptcy attorney before making any decisions or taking any action.
The above summary of bankruptcy and divorce is by no means all-inclusive and is not legal advice. Laws may have changed since our last update. For the latest information on bankruptcy and divorce, speak to a divorce attorney and bankruptcy attorney in your area.