When people get married, the last thing they think about is having to face the prospect of getting divorced in the future. All happy couples believe they will stick together through thick and thin, until the day they die.
The reality of the situation is that more people are getting divorces each year. In fact, around 40-50% of all couples get divorced! It’s a shocking statistic, I know. But it’s one of those sad facts of life that some people will inevitably face at some stage. If you’re about to get a divorce, you might have got told to become bankrupt first.
But, should you consider undertaking such a life-changing action? It turns out that filing for bankruptcy before getting a divorce makes a lot of sense for many people. Here’s why:
Divorces are binding against couples, not their creditors
One of the questions soon-to-be divorced couples get asked is who will be responsible for certain debts. Almost all married couples take some form of credit out, such as mortgages, for example.
You both might come to an agreement on your debts. And the judge might be happy to rubber-stamp that agreement. But what happens if your former spouse disappears without paying anything?
Because the debts were also taken out in your name, you are equally liable for their payment. At least, that’s the case from a creditor’s point of view. If you go bankrupt before getting divorced, it means that you won’t be liable for any debt your ex incurred.
It makes divorces easier
It’s no secret that some divorces are messier than others. But if you both want an amicable split, going bankrupt makes the process easier. There is less paperwork to deal with, and it’s easier to organize who will benefit from certain assets.
Before you decide that bankruptcy is for you, it’s worth talking to an expert divorce law firm like the Micklin Law Group. Not all divorce cases are clear-cut. That’s why it is best to have someone look over the situation and give you their professional advice.
Which type of bankruptcy is best for you?
In the United States, there are two main types of bankruptcy that most people will opt for. The first is Chapter 7, and the second is Chapter 13.
Chapter 7 bankruptcy is known as a straightforward one. That’s because it gets rid of all debts, save for things like student loans and alimony payments. You get to keep certain assets while the rest gets sold off, and the proceeds distributed amongst your creditors.
The only downside is that details of the bankruptcy stay on your credit report for ten years. During that time, getting credit will be quite difficult.
Chapter 13 bankruptcy is a form of debt restructuring. Instead of being absolved of your debts, you make lower payments to your creditors and have a longer time to pay off what you owe. This form of bankruptcy will stay on your credit report for the next seven years.