Protecting both spouses during Divorce
Filing bankruptcy activates your automatic stay of protection. If the bankruptcy is filed after the divorce, only the filing spouse will be protected by the automatic stay. The automatic stay doesn’t only operate to freeze your assets and delay a divorce. The automatic stay prevents your creditors from foreclosing on your home, repossessing your car, garnishing your wages, or turning off your utilities as long as the stay is effective. The stay is effective until your case is discharged or dismissed. Collection on dischargeable debts will be halted permanently, while collection on non-dischargeable debts will only be temporarily suspended.
5 things to know about Bankruptcy and Divorce
1. You may need to find a new attorney if you file divorce in the middle of an active bankruptcy. If you file divorce while you are represented by the same attorney, it creates a conflict of interest for your bankruptcy attorney. This can result in additional expensive attorney’s fees, so be wary of this when you decide which chapter to file and when to file your divorce.
2. Domestic obligations, such as child support and alimony, aren’t dischargeable in a bankruptcy. Don’t delay your bankruptcy in the hopes of discharging your upcoming domestic obligations.
3. If you are considering divorce, one of the few advantages of filing a Chapter 13 before divorcing is the possibility of lien stripping. You may be able to discharge any junior mortgages on your home in a Chapter 13 if you owe more on the home than what it’s worth.
4. You will need to catch up on your taxes to be able to complete your bankruptcy. You may want to consider catching up on taxes before starting your bankruptcy or your divorce.
5. Some law firms are full service, meaning they handle bankruptcies and family law cases. If you are unsure which case to file first, you should contact a full service firm for a consultation. Our office offers free consultations, which we can also hold over the phone. Call today to schedule your free consultation, discuss your options, and learn about our affordable payment plan options.