Divorce and Bankruptcy
One of the most common reasons that a couple gets divorced is due to financial concerns. Similarly, one of the most common reasons that a couple or individual files for bankruptcy is because of a divorce. If you are currently facing the prospect of divorce and bankruptcy, many of your questions can be answered by an attorney, who can also provide the legal assistance that you require to accomplish. We urge you to reach out to an experienced Santa Clara or San Jose bankruptcy attorney today.
Chapter 7 Bankruptcy
Over 5,000 people file for Chapter 7 bankruptcy each year in northern California alone, according to the United States Bankruptcy Court. Chapter 7 bankruptcy can be a great option for getting a fresh start because it does put a cap on the debt limit of the debtor, the debtor does not have to go through with a repayment plan, and it discharges more types of debt. It is a relatively quick and painless process, though there are income limitations. However, you cannot repeat Chapter 7 within a time frame of six years, according to California courts.
Filing for Bankruptcy Jointly before Divorce
By filing for bankruptcy as a married couple, before divorce, you are more likely to eliminate the possibility of ineligibility due to an income limitation. This is particularly important when one spouse is the sole or primary breadwinner. As a married couple, all debt incurred during the marriage is a shared responsibility, which is why addressing debt, and the possibility of bankruptcy, before getting divorced can be critical. Additionally, because during Chapter 7 bankruptcy you will likely be required to hand over property to help repay the debt (and because no repayment plan is necessary during Chapter 7 bankruptcy), it makes sense to be rid of this property before divorce and the complex process of property division. There is no point in fighting over the house if it will end up in the bank’s hands in the end.
Filing for Bankruptcy after Divorce
In some circumstances, it may make more sense to file for bankruptcy after divorce. This would be the case if one spouse made much less than the other and was able to file for Chapter 7 on their own and avoid Chapter 13 with the combined earnings of their spouse’s higher income. Or, if both spouses make too much to qualify for Chapter 7 jointly, they may be able to qualify as individuals. Bankruptcy after divorce can also protect property from creditors if that property is no longer in the debtor spouse’s hands, and in the case that a high amount of financial support will be owed by one spouse to the other.
Call Gemma V. Reyes Today
For answers to all these questions and more, contact a passionate San Jose bankruptcy and divorce attorney at the office of Gemma V. Reyes today. We are eager to help you throughout each step of your case.