Typically, finances form a significant part of any divorce. Property division between ex-couples usually takes center stage, and filing for bankruptcy is likely to weigh in on one or more aspects of your divorce case. For instance, filing for bankruptcy may not affect actions around child support or custody. However, discussions around the property division may have to be put on hold after you file for bankruptcy.
Other questions may arise, especially around the financial obligations owed by each spouse, as discussed below.
What happens to a couple’s joint debt?
Shared responsibilities such as joint debts or credit cards at the time of divorce remain the burden of both spouses. As such, if you declare bankruptcy, your ex-spouse is still expected to meet full payment of such joint debts. Notably, a divorce does not eliminate joint debts. If the other party declares bankruptcy, you may have to enter negotiations with the lender or creditors on a revised debt repayment plan in light of the new developments.
Where will personal assets go in the divorce?
It depends. At what point of your divorce did you file for bankruptcy? If you filed for bankruptcy before the divorce, your assets are transferred to your bankruptcy estate and not available for distribution to your ex-spouse. If your assets are already legally transferred as part of the divorce agreement, they are not available to creditors.
Protect your financial future
It can get a bit complicated when financial and personal matters intertwine. For example, filing for bankruptcy may delay your divorce proceedings, and things may not be so straightforward. However, learning more about instances like these when family law and bankruptcy law overlap will put you in a better position when it comes to securing your financial future and protecting your legal rights.
