Bankruptcy in the Context of Divorce, Separation and Marriage
Financial difficulties are a source of conflict and stress in marriage, and are one of the most common catalysts for divorce. Whether you are married, separated, going through divorce or recently divorced, you may benefit from a fresh financial start. Bankruptcy can eliminate the debts you have accrued or make them more manageable to repay.
The experienced lawyers of Hoglund, Chwialkowski & Mrozik, PLLC, can advise on the planning and timing of your bankruptcy regarding your pending divorce, your spouse’s separate debts, your post-divorce finances, tax implications and other considerations. We handle Chapter 7 and Chapter 13 cases in the Twin Cities and statewide.
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Minnesota Lawyers: Bankruptcy and the Divorce Implications
Bankruptcy and divorce often are intertwined. Both are a last resort after you have tried everything else. Both represent a fresh beginning. Our attorneys can help make the most of your situation by strategizing your bankruptcy to put you in the best position to move forward with your new life.
Bankruptcy for Married Couples: Joint vs. Individual Filing
If you are happily married but struggling with debt, it may be beneficial for only one spouse to file bankruptcy. This is especially true if one spouse has high debt and the other spouse has little debt and solid credit. Arrange a consultation to decide if you should file together or not.
Common Questions About Divorce, Separation and Bankruptcy
Do I have to be legally separated to file a bankruptcy on my own? No. You do not have to be legally separated to file a bankruptcy without your spouse. You cannot separate with the intention of skirting the bankruptcy qualification laws, but formal legal separation is not necessary to file bankruptcy as an individual.
Can I file jointly with my spouse if we are separated? Yes. If you and your spouse both need to file bankruptcy to wipe out your debt, you both may file together even if you are separated. In fact, filing together has many benefits. It eliminates the stress associated with debts and if you do later divorce, you won’t have the burden or the conflicts. It is also less expensive to file jointly as opposed to filing two separate cases.
If I know I am going to file bankruptcy, should I just give my spouse all the assets in the divorce decree? No. You should not give all your assets to your spouse in the divorce decree or in anticipation of a divorce. Most people are able to keep all their assets when they file bankruptcy, but transferring assets before filing your bankruptcy can cause problems in your bankruptcy case. A divorce decree deciding property and ordered by a family court judge will not be challenged by a bankruptcy trustee.
Should I get divorced before or after I file bankruptcy? There can be merits either way. If you and your spouse are both considering filing for bankruptcy case, then you may want to file one case, jointly. Filing jointly will save you both time and attorney fees. By wiping out debts before divorce you will have less to fight about in the property and debt settlement.
Both spouses must be eligible for bankruptcy to qualify jointly. If one spouse qualifies separately and the other spouse does not, then filing separately before or after bankruptcy may be the best option. Our knowledgeable bankruptcy attorneys are here to assist you and to advise you of your best options regarding whether to file individually or jointly and whether to file before or after a divorce.
Do I get to keep the child support or spousal maintenance that is owed to me pursuant to the divorce decree? Yes. Bankruptcy does not discharge child support obligations, alimony awards or arrears thereof. You are able to keep all past and future child support and spousal maintenance payments that are owed to you.
Will I still be responsible for debt that I am ordered to pay in the divorce decree? Possibly. Unsecured creditors cannot collect on debt that was discharged in a bankruptcy. Therefore, if you owe the debt to the creditor and your ex-spouse was not a co-signer on the debt, you will no longer be obligated to pay that debt. For example, credit card debt in your name could be discharged.
However, if the debt is a joint debt (you and your ex-spouse are co-signers on the debt), then the creditor can pursue payment from your ex-spouse despite the divorce decree ordering you to pay. The bankruptcy blocks the creditor from collecting against you but does not extend the same protection to your ex-spouse. Since the creditor can go after your ex-spouse for the debt, your ex-spouse can in turn ask the family court judge for a judgment for the amount you were ordered to pay in the divorce decree.
If you have joint debt with your ex-spouse, talk to one of our bankruptcy attorneys before your divorce is finalized. We can sort out your rights and obligations and the implications of the pending divorce, and work with your divorce attorney to make sure you are protected financially.
Can I keep the money that my ex-spouse owes to me as a result of a marital lien or as a result of the terms of the divorce decree?
Often, yes. The bankruptcy laws allow most debtors to keep their assets depending on the type of bankruptcy case and the value of the assets. In rare cases, sometimes a portion of or the entire amount of money or property settlement owed to a debtor may be non-exempt. The possibility of surrendering a portion of your marital lien or settlement is one of many reasons to consult an experienced bankruptcy lawyer.
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The Hoglund Promise · What Our Clients Say
Our attorneys have more than 40 years of combined experience in helping clients navigate through their divorce decree and their bankruptcy cases. We are well versed in helping you to maximize your bankruptcy protections and to keep your personal assets. Our bankruptcy attorneys look forward to helping you obtain your well-deserved fresh start.