B is for Bankruptcy During a Divorce.

 

 

Are you and your spouse heading towards divorce? Divorce can be one of life’s most stressful and emotional situations. If you combine this with filing for bankruptcy, you can find yourself in a very traumatic situation.

According to an article in USA Today, “Nearly 90% of all families with children who filed for bankruptcy, list divorce as one of the causes for bankruptcy.”  It also stated, “About one-third of the families owed an entire year’s salary on their credit cards, which is why it’s easy to see how a divorce could throw a family into a downward financial spiral.”

Unfortunately divorce does not put an end to money problems. The debts incurred will still be there after divorce until they are completely paid off. Sometimes filing bankruptcy can help but keep in mind, it will not help you avoid court ordered alimony or child support payments because they are not dischargeable in a bankruptcy proceeding.

If you are considering a divorce and have large debts that are not likely to stop accumulating, you may wish to consider bankruptcy. It is important that you consult an experienced divorce/bankruptcy attorney who will educate and help you better understand all the issues involved.

It might make sense to file for bankruptcy before starting the legal divorce proceedings. The reason is bankruptcy can make it easier to negotiate the division of debts and it can also protect you from an ex-spouse filing after the divorce.

Bankruptcy is not a cure-all, but it can either temporarily or permanently prevent creditors from collecting debts from you. This may help give you a fresh financial start and allow you to move forward towards your own financial health.

AZ Answers

About Ann Zuraw

Ann Zuraw, the voice behind "Chicks, Chat and Change", is a Certified Financial Planner (CFP®), Chartered Financial Analyst (CFA®), and Certified Divorce Financial Analyst (CDFA™).If you have comments on this post contact Ann Zuraw

, , , , , , , , , , , , , ,