Many people getting a divorce, especially the unemployed, are under financial stress and believe that filing for bankruptcy will lessen the burden of the upcoming divorce.
Credit card debt, student loans, housing mortgages and car mortgages are some of the issues that need to be dealt with during a divorce. Although bankruptcy may not necessarily be a good idea in all divorce cases, a number of people seeking divorce opt to file for bankruptcy. Attaining the legal aid of an experienced divorce attorney can be very helpful when you’re facing a divorce. A financial planner can also help you obtain a fair division of all assets and liabilities.
While filing for bankruptcy, some people try to hide their credit card accounts from their attorneys so that they can continuously charge on them. However, credit card companies do run credit reports on clients regularly. When one files for bankruptcy, the creditor will immediately close the account. A person cannot keep any credit card account open during a bankruptcy filing.
If you’re facing a divorce, it’s a good idea to close any joint credit card accounts to avoid additional charges. Discuss your decision to close the account with your spouse. Dealing with joint credit card payments after the divorce will be easier if you make a divorce condition that the balances on the accounts split equitably between you and your spouse. The split balances are then transferred to separate accounts under your spouse’s and your name. This action will serve as protection of your credit in case your spouse fails to pay his or her share of the credit card debt.
The most important consequence of filing bankruptcy is the automatic stay, which stops all efforts to enforce debt collection. When it comes to divorce and bankruptcy, there are certain obligations that are considered exceptions to the automatic stay. Obligations to pay support from a divorce are not dischargeable. These obligations include spousal support, alimony, and child support. Criminal restitution, student loans, settlement in divorce, and debts arising from theft or fraud are also non-dischargeable in bankruptcy.
If you or your spouse is considering filing bankruptcy, it’s best to file prior to getting a divorce. This allows you to know which obligations will be discharged so both of you can negotiate any issues. Doing so may also make the divorce process less complicated.
If you’re dealing with a divorce in North Carolina, contact an experienced family lawyer from McIlveen Family Law Firm at (704) 865-901 to discuss your case.