One of the top reasons that individuals file for bankruptcy is because of divorce. After a divorce proceeding, it is common that both parties must file for bankruptcy. Many times a divorce can leave people with large financial debt. If you are thinking about filing for bankruptcy after your divorce, you are not alone. This article will discuss everything to keep in mind if you plan to file for bankruptcy after going through a divorce.
What Role Does a Divorce Decree Play in a Bankruptcy?
A divorce decree will determine what property, assets, and debt each couple is left with. Generally, the Bankruptcy Court will ask for a copy of the divorce decree. The Trustee will want to see who is liable for the debts if the property was to be transferred to one spouse, and what financial assets you are left with. It is important that you read over your divorce decree and understand what you are liable for.
Some things to look for in a divorce decree are:
- Who is liable for the outstanding debts. If both of you are liable then you will want to see how much you owe and what debt you will be responsible for.
- What assets you are entitled to. Individuals are required to list all of their assets in their bankruptcy petition. A bankruptcy trustee will want to see how any joint assets were to be divided as per the divorce decree.
Should I File For Bankruptcy During My Divorce or Wait Until After?
If your divorce is not finalized then you should speak with a bankruptcy attorney to determine when you should file. When you file for bankruptcy, an automatic stay goes into place. The automatic stay stops any other court proceedings until the bankruptcy is complete. Unfortunately, this can hold up your divorce case.
Further, you will want to consider what property will be divided pursuant to your divorce case. In some cases, property that is divided pursuant to a divorce decree (after it is finalized) can be exempt from the trustee going after it. If there are assets that haven’t been split and there is no exemption, the trustee can claim those assets be taken and paid to creditors. It is important to have a bankruptcy lawyer look over your assets to determine if it makes sense to wait until the divorce case is over before filing for bankruptcy.
Exemptions are very important when it comes to filing bankruptcy. In some cases, it may make sense to file before you get a divorce because you may be able to double your bankruptcy exemptions while you are married. In New York and New Jersey, individuals can double their exemptions when they are married which may allow them to keep their property if they file before their divorce is finalized.
If you are going through a divorce it is essential that you speak with a bankruptcy attorney as soon as possible. Determining when to file for bankruptcy when you are going through a divorce is vital. Karra L. Kingston Esq. has helped many people determine when filing for bankruptcy is best for their situation. Karra L. Kingston Esq. will hold your hand through the bankruptcy process to ensure that you feel comfortable with the process. Karra L. Kingston file bankruptcy cases in and around Staten Island, New York, and Union City, New Jersey.