Bankruptcy can be a solution to your problem.
Video Transcribed: Edward Kelley here, at one, eight, eight, debt line, answering your bankruptcy questions. And today we’re going to start a series for the week on bankruptcy and divorce. Two not so fun things, but that actually can work together quite well. So for our first in the series, we’re going to talk about bankruptcy as a planning tool for divorce. So I actually get a lot of clients who are in the process of divorce, who ask me, “Is this a good time to do a bankruptcy?” Generally, yes. So I’m not talking about divorces with lots of assets, and a debt that’s tied to collateral necessarily.
I’m talking more about the couple who, and this happens a lot unfortunately, double whammy. Relationship fails often under the pressures of money, mounting debt. Neither partner has any resources to take care of the debt the couple is facing. So they call it quits and then they have a bunch of mutual debt. They don’t know what to do with.
Well, a married couple can file together. No additional filing fee. Generally $350 to file a chapter seven, that’s what I’m talking about here. We’ll talk about divorce and a 13 in another series. But same cost. I charge the same fee for a single or a couple, it’s not a whole lot more work, a few more pay stubs. Generally the debt is the same. So if you’re going into a divorce in this scenario, you can file a bankruptcy together, and discharge all of the debt mutually.
So why not just one of you do it? Well, the problem is you’ll go into the divorce. Let’s say you have five credit cards and a car that was repossessed and you’re both liable on all of it. One of you does a bankruptcy. Well, of course that leaves the other person solely responsible for all of the debt. If you recall from earlier series, the bankruptcy does not impair the contract as to any non filing party. Meaning you’re both on a car note and you discharge it, that has nothing to do with the other person. The lender can’t collect from you, but they can certainly collect from anyone else who is liable on the loan.
So if you’re calling it quits, but you’re at least able to talk enough together to cooperate to file a bankruptcy, and to show up for the creditor meeting together to be questioned, go for it. Trustees completely understand that people do this while they are divorced. That is okay. As long as you are still married, you are able to do it, and it’s quite expected under those circumstances that you might file.
So this is how bankruptcy can go hand in hand with a divorce to really let both of you have a clean slate and start your lives over. And we’ll look at other of bankruptcy and divorce in our next edition of one, eight, eight, debt line. And as always, you can get in touch with me at that number or email me at Edward@wirthlawoffice.com