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We Can Answer Your Questions Regarding Division Of Debts In Divorce
Just as properties and assets must be divided in a divorce in California, debts must also be divided. If you are contemplating divorce and bankruptcy, you may have questions about the division of debt that only a bankruptcy attorney can answer.
Divorce is often caused or accompanied by severe financial stress. It’s not unusual for one or both of the parties to file for bankruptcy protection. Filing for bankruptcy during divorce can also provide significant strategic advantages to the party filing for relief. Often the first to file for bankruptcy gains a strategic advantage
At the bankruptcy law firm of Weintraub & Selth, APC, we proudly use our decades of experience to help clients file for bankruptcy as they also go through the divorce process. We have the resources and the experience to be your guides and your advocates in even the most complex divorces.
To discuss your situation with a bankruptcy and divorce attorney, please call (310) 220-4147 today.
Should I File for Bankruptcy or Divorce First?
If you and your spouse are at a place where you can cooperate and work together with your bankruptcy attorney, then you should strongly consider filing for bankruptcy before filing for divorce. By filing jointly, all your marital debts will be addressed under a single bankruptcy case. In this way, your joint debts can be discharged which should make the division of assets simpler in a divorce case.
This is also helpful if only one spouse has above-average income money since it will increase the chances of qualifying for a Chapter 7 bankruptcy for that spouse. Bankruptcy will also help you eliminate those contracts that neither one of you wants or is unable to keep, such as high car loans or mortgages that are underwater.
If you qualify for a Chapter 7 bankruptcy, the process should be complete in about 3½ months. Therefore, you and your spouse can eliminate those unsecured debts and remove any conflict over them. If, however, you file for Chapter 13 bankruptcy, be aware that both you and your spouse will be responsible for the repayment plan for the full 3-5 year plan period and you may also be prevented from dividing assets by sale.
If your joint income is too high to qualify for Chapter 7 bankruptcy, then filing for divorce first might make more sense for the lower-earning spouse. For example, if you make significantly less than your spouse you may be able to qualify for Chapter 7 without a Chapter 13 payment plan after you are no longer married.
Debt incurred during the course of a marriage is considered “community claims.” Meaning that while only the spouse who signed for the obligation is personally liable, the creditor can satisfy its judgment from community property. Credit cards, mortgages, auto loans, and other types of debt are typical community claims. When both spouses have signed for a debt, the creditor may pursue both even where the divorce court assigns the debt to just one spouse.
Debt may be divided equally or unequally depending on the specifics of the case. Divorcing parties may agree on the division of debt or a judge may assign the debt. A court may assign a more significant amount of debt to one party or the other. Of course, not all cases are the same, which is why you should discuss the impact of a debt division with an experienced bankruptcy attorney at our law firm.
Contact our Bankruptcy & Divorce Lawyers Today
Proper bankruptcy planning in a divorce is key. Reach out to our Los Angeles office today to tell us about your circumstances so we can help you make the decision that is right for you. Our attorneys are prepared to answer your questions and protect your best interests, no matter what your situation may be.
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"If you are a business owner going through difficult times and need help restructuring or closing your doors, this is the law firm to work with."- Paul Trump
"He also gave me his honest opinions on what paths we could take, what would be a good use of my money and what would not, which I appreciated after having gotten an expensive runaround from the previous attorney."- Lynn L.
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We can help you find clarity and peace of mind so you can move ahead to a positive future with your financial situation under control.