Divorce and Bankruptcy Attorney in Broomfield, Colorado
Divorce is one of the most prevalent causes for people to contemplate bankruptcy. When a marriage ends, the financial dynamics of the family generally shift dramatically. Suddenly, instead of one, you have two mortgage payments to make. Child support responsibilities, alimony payments, court fees, and other costs must be factored in.
At the Law Office of Clark Daniel Dray, our CO bankruptcy attorneys provide knowledgeable legal advice to clients in Colorado who are struggling with financial and marital issues. Our bankruptcy attorney knows both areas of law, allowing him to give clients the comprehensive advice they seek.
Income, Marriage, and Bankruptcy Qualifications
Your income may influence the bankruptcy chapter you are eligible to declare and whether or not you are married.
In contrast to a Chapter 13 repayment plan bankruptcy, which requires you to make payments to your creditors for 3 to 5 years, a Chapter 7 bankruptcy allows you to discharge your obligations in 3 to 5 months.
The amount of money you may make while still qualifying for a Chapter 7 bankruptcy is determined by the size of your family. The more people in your home, the more money you can make while still qualifying.
Furthermore, you may only declare a combined bankruptcy if you are married. It implies that if you divorce and your children move in with your ex-spouse, none of them are allowed to dwell in your home.
You may have previously qualified for a Chapter 7 bankruptcy, but you may be obliged to file a Chapter 13 repayment plan owing to your smaller family.
Divorce splits assets between spouses, whereas bankruptcy liquidates assets not covered by bankruptcy exemptions.
If you file for divorce before declaring bankruptcy, the divorce court may award your assets. If bankruptcy is filed after the assets have been divided, you may no longer shield the assets from creditors.
By exploiting the bankruptcy exemptions available to married couples, you may maximize the protection of your assets and remove this difficulty by filing bankruptcy before divorce.
Suppose you are on the verge of filing bankruptcy but decide to wait and obtain a divorce first. In that case, you should be aware that filing bankruptcy while your divorce is in progress will prevent the property from being split owing to the automatic stay.
The automatic stay prevents acts against your property to shield it from collection efforts by your creditor. Filing bankruptcy while in the middle of a divorce may cause your divorce to take longer since the assets must be dealt with first in bankruptcy.
Debts in Bankruptcy and Divorce
Credit cards and dischargeable obligations are wiped off when you file for bankruptcy, giving you a fresh start. Alternatively, the divorce court may require you to settle your spouse’s debts. If you anticipate your ex-spouse to pay your bills, you should be aware of the restrictions of such an agreement.
The court ordering a party to pay a debt does not affect who owes the creditor the loan. The duty imposed by the divorce court mandating payment of another person’s debt is a new responsibility to that individual, not to the creditor.
If your spouse fails to make a payment on a credit card you carry in your name, you might face collections, litigation, and poor credit reports. If your spouse is already insolvent or unable to pay their expenses, you may fall into bankruptcy following your divorce if your debts outweigh your income.
Is It Okay to File for Divorce and Bankruptcy at the Same Time?
While you are permitted to do so, it might sometimes make things more difficult. People frequently opt to file for bankruptcy before divorce. If you and your spouse are on good terms, filing for bankruptcy first can be good.
For one thing, you can split attorney and filing expenses. You can also claim bankruptcy exemptions for the property you and your partner jointly own. When you file for bankruptcy, what’s known as an “automatic stay” kicks in. It prevents creditors (people or organizations to whom you owe money) from contacting you or attempting to freeze your property and assets.
They can’t collect on the debts you owe them since they’ve been put on hold. This automatic stay is required because the bankruptcy court must establish what debts you owe and how you can utilize your current assets to cover at least some of them.
If you’re still in the middle of your bankruptcy, filing for divorce complicates things because divorce also divides your assets. It creates issues since the automatic stay makes it very hard for the family court to have access to your assets and subsequently divide them.
Is It Wise to File for Bankruptcy Before Getting Divorced?
Before starting the divorce and bankruptcy process, keep in mind that the two methods are unlikely to happen simultaneously. Legal motions can be filed concurrently, although one case will take precedence in most jurisdictions.
If both cases are underway simultaneously, bankruptcy is usually held until the divorce court divides the marital debts and assets between the parties.
Juggling the two legal proceedings would only add to the complexity of your position. Therefore, for simplicity, you should consider filing for divorce before filing for bankruptcy. However, it may be preferable to file for bankruptcy first and then deal with the divorce in other cases.
Your financial circumstances and the rules that apply in your country will determine the optimal sequence to handle divorce and bankruptcy. Before beginning any method, you should consult a skilled divorce and bankruptcy attorney to establish the best option.
When to File for Bankruptcy Before Divorce?
It is preferable to file for bankruptcy initially if the divorce is amicable. Because most debt is marital, part or all of it may be forgiven, and you may lose some assets.
As a result, after the divorce is finalized, each spouse will have less debt, and they may split the remaining assets fairly. You should be aware that some debts, including school loans, may exclusively belong to one spouse and are not dischargeable in bankruptcy.
Furthermore, in an amicable divorce, both spouses might employ the same bankruptcy attorney instead of paying for two. If you are qualified for Chapter 7 bankruptcy, it is advisable to take care of that first. Discharge typically takes three to six months on average. As a result, your divorce will not be delayed for an extended period.
When to File for Divorce Before Bankruptcy?
If you and your husband are at odds and expect the divorce to be contentious, it’s good to document your separation first. Even if the court must make final judgments during the divorce process, you will split debts and assets, each spouse receiving a piece of each. After the divorce is finalized, each spouse can solely file a bankruptcy involving their debts and assets.
It’s preferable to obtain a divorce first if you intend to file for Chapter 13 bankruptcy. This bankruptcy chapter has a particular debt payback plan, generally over a five-year term. If you and your husband aren’t getting along and both filed for bankruptcy, you’ll remain “entangled” five years after the divorce. It may be an uncomfortable experience.
While both divorce and bankruptcy are emotionally draining, it’s crucial to see them as opportunities for a fresh start. The essential thing is to seek legal guidance from a qualified bankruptcy attorney about your alternatives and which is best for you. If you live in Colorado, the Law Office of Clark Daniel Dray can assist you with your legal concerns.
Chapter 7 Versus Chapter 13 Bankruptcy
Chapter 7 bankruptcy typically takes three to six months to complete, depending on the amount of debt you can erase. You might then file for divorce after the bankruptcy is finished, avoiding some of the complications that can arise when filing for bankruptcy and divorce at the same time.
Because Chapter 13 comprises a three-year to five-year repayment plan, you’ll have to adjust your repayment plan if you divorce during that time. Among the possibilities are:
- Get rid of the repayment plan totally by paying off your debts.
- Restructuring the repayment plan into two distinct instances, one for you and your spouse. This naturally has issues that may lengthen the divorce process, so get advice from a knowledgeable bankruptcy attorney.
What Happens to Your Credit After Divorce?
Whether you choose to file for divorce or bankruptcy first, it’s crucial to understand that neither procedure will separate your money from your soon-to-be ex-spouses.
For example, in the case of marital debt, Chapter 13 plans may make both parties legally liable for repayments. There are some types of debt that bankruptcy cannot dismiss (student loans, for example), and if you or your spouse cosigned on one of these loans, you might be equally responsible for seeing that it is paid, even after your divorce and bankruptcy.
Bankruptcy has profound, long-term effects on people’s credit ratings and their ability to get loans or credit cards. While divorce does not immediately influence an individual’s credit score, the aftermath of a divorce might lead to conditions that do.
Suppose one party withholds payments or otherwise utilizes joint debt to spite the other. In that case, those situations—and the long road to recovering from the credit effect of bankruptcy—will only get more problematic.
It’s never easy to go through bankruptcy and divorce, but with a sensible approach and some good faith on both spouses’ parts, it’s feasible to move on and start rebuilding a solid financial footing in years.
How Can Our Skilled Bankruptcy Attorney Help You?
When a person or couple files for divorce, they may discover that their debts are too significant to pay off on a single income. bankruptcy is one possibility, but it comes with many issues and worries.
What effect will this have on the property partition agreement? Is it preferable to file now or wait till the divorce is finalized? What is the impact of bankruptcy on child support payments?
Our bankruptcy lawyer from the Law Office of Clark Daniel Dray helps clients understand their options and the repercussions of their actions while developing a debt relief plan that is personalized to their needs. This plan will safeguard as many assets as possible while also providing the person or couple with a fresh start to overcome the divorce’s financial difficulties.
In many situations, Chapter 7 bankruptcy might even relieve a person’s need to pay their bankruptcy attorney.
Our Bankrutpcy Attorney Can Help You in Your Time of Need
Divorce is frequently associated with financial difficulties. Similarly, economic challenges might lead to divorce. If you have questions concerning divorce or bankruptcy, our law firm will be able to offer you the answers you want.
The Law Office of Clark Daniel Dray is based in Broomfield, Colorado, and provides bankruptcy law services to people in the surrounding region. Our office can provide appropriate legal guidance from an experienced divorce and bankruptcy attorney. Our customers are our number one focus.
We strive to make the bankruptcy procedure as simple as possible. Our competent bankruptcy attorney will take the time to explain the various steps involved in filing for bankruptcy and promptly answer your concerns.