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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 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 Zolkin Talerico & Selth LLP, we proudly use our decades of experience to help clients file for bankruptcy as they go through the divorce process. We have the resources and experience to guide and advocate for even the most complex divorces.
Call Weintraub Zolkin Talerico & Selth LLP today at (310) 220-4147 or contact us online to schedule a meeting with our bankruptcy and divorce attorney in Los Angeles!
Do 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. Filing jointly will address all your marital debts under a single bankruptcy case. In this way, your joint debts can be discharged, simplifying the division of assets in divorce.
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 of you wants or cannot keep, such as high car loans or underwater mortgages.
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 resolve conflicts. If you file for Chapter 13 bankruptcy, be aware that both you and your spouse will be responsible for the repayment plan for the entire 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 qualify for Chapter 7 without a Chapter 13 payment plan after you are no longer married.
Debt incurred during a marriage is considered a "community claim." 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 case's specifics. Divorcing parties may agree on the debt division, or a judge may assign the debt. A court may assign a more significant debt to one party or the other. Of course, not all cases are the same, so you should discuss the impact of a debt division with an experienced bankruptcy attorney at our law firm.
Contact Our Los Angeles Bankruptcy & Divorce Attorney 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 right decision. Our attorneys are prepared to answer your questions and protect your best interests, no matter your situation.
Contact Weintraub Zolkin Talerico & Selth LLP today to schedule a meeting with our bankruptcy and divorce lawyer in Los Angeles!
Hear From People We've Helped
Honesty, Integrity, and Respect for the LawSally C.
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"David Zolkin’s tenacious advocacy restored my faith in the judicial system. He was able to secure an order dismissing the debtor’s case with a permanent bar; something unheard of in bankruptcy. This, in turn, protected my rights as a creditor."Former Client
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