Bankruptcy, by its very nature, is difficult for many people to navigate. It requires complex legal and financial paperwork, as well as excellent organizational skills. The requirements often intimidate those who could benefit from the protections of bankruptcy.
Filing bankruptcy after a divorce may be even more difficult or confusing. There are many factors that can change during a divorce that will influence the outcome and the accuracy of your bankruptcy proceedings. Familiarizing yourself with some of these unusual complications can help you avoid issues when you seek the discharge you need to move on in life.
Make sure you’re actually responsible for the debt in question
Much like the division of assets, the division of debts in divorce is complicated. California is a community property state, which means that you may walk away from the divorce with the expectation that you will assume and repay certain debts from the marriage.
It’s common for the courts to divide debts in creative manners, often with the desire of making the split of debts and assets fair to both spouses. That could mean that you don’t actually have legal responsibility to pay specific accounts or debt anymore.
Carefully reviewing the exact terms of the asset division process can give you guidance regarding which marital debts are still your responsibility.
You may have to confirm whether the debt will impact your ex
Depending on the type of debt, you may be initially responsible. If you haven’t refinanced or adjusted the debt after the divorce, the creditors involved may not understand who has a legal obligation to pay on the account.
In some cases, when one spouse files bankruptcy after a divorce, the other winds up facing increased harassment from creditors, who attempt to force them to pay the debt, despite the terms of the divorce allocating the debt to the other spouse.
You may need to reach out to individual creditors to make sure that they will not engage in collection activities that violate the terms of your divorce decree.
You likely need guidance to complete the process accurately
Divorce is a fresh start for your personal life, while bankruptcy is a fresh start for your financial life. Splitting your assets and debts up in a divorce can create a more complicated and strained financial situation for both you and your ex.
The relief of bankruptcy can help you move on from the debts you accrued during your marriage. However, the complication of a recent divorce can make it difficult to complete. Working with an attorney who understands the intersection of personal finance and personal relationships can help you build a strong foundation for a better future.