Sometimes financial distress is a reason for divorce; sometimes divorce is a reason for financial distress; sometimes financial distress is a reason for bankruptcy; and sometimes divorce is a reason for bankruptcy. It happens all too often in San Diego and through out California that divorce and bankruptcy occur together, a situation that can create confusion, disputes, and the need for additional intervention from the courts, in which case it is necessary to hire an experienced San Diego divorce and bankruptcy attorney for legal representation.
IS THE BEST TIME FOR A BANKRUPTCY BEFORE OR AFTER A DIVORCE?
If you and your spouse have reached a point financially where you are overwhelmed with debt and at the same time your marriage has fallen into disrepair and divorce is inevitable, it is usually easier if you file bankruptcy as a couple first, before proceeding to the divorce court. It will simplify the division of property to have no debts to muddy the water. It is also cheaper, because it costs the same for a couple to file bankruptcy as it does an individual.
Although this may be the least complicated avenue to travel and the cheapest in terms of court costs and legal fees, it may not be the best choice for everyone. In California, unlike many other states, there is no doubling of asset exemptions for a couple. If you and your spouse own assets in excess of the exemptions allowed, it may make sense for you to divorce and then both file for bankruptcy. This allows you to double the amount of exempt assets.
A pre-divorce Chapter 7 may not be possible if both spouses are bringing in income and the total exceeds that allowed by the means test; and the three to five year period that a Chapter 13 takes is unlikely to be palatable to either spouse wanting a divorce.
A post-divorce bankruptcy does, however, create many issues and complications that can cause both newly divorced spouses to have to face each other again in court.
COMPLICATIONS WHEN A BANKRUPTCY FOLLOWS A DIVORCE
The fact that a divorce decree orders one spouse to pay a particular debt incurred jointly doesn't eliminate the other spouse's obligation for that debt to a creditor. If the person who was to pay the debt files for bankruptcy, the other can be on the hook for payment, albeit with the right to be reimbursed by the other. Financial obligations of a divorce decree cannot be discharged in a bankruptcy. But this will probably require going after the bankrupt spouse for the reimbursement, which means more expenses, lost time, and a stressful dragging-on of adversarial court proceedings.
These situations can become extremely complex, and complications can be minimized by planning in advance, so it is always best to involve a California bankruptcy lawyer early on. At Contreras Law Firm, our family law lawyers and San Diego bankruptcy lawyers can help navigate you through these complexities.
THE NECESSITY OF HAVING AN EXPERIENCED SAN DIEGO BANKRUPTCY ATTORNEY'S ADVICE
When a divorce and a bankruptcy occur together, a plethora of legal issues will need to be addressed. It makes sense to consult a skilled and experienced San Diego divorce and bankruptcy attorney before deciding the best way to proceed. Let your lawyer know that there will be a divorce, and consider the ramifications of a bankruptcy carefully.
BANKRUPTCY LAW IN SAN DIEGO
In San Diego, if you and your spouse are considering a divorce and the need to file for bankruptcy is a real possibility, call Contreras Law Firm to arrange an appointment with a an experienced and knowledgeable bankruptcy attorney. Every case is different, and what is right for you will depend on your individual situation. Your lawyer will be able to look at the big picture and offer you the guidance you need to navigate the complicated bankruptcy statutes at this difficult time. The initial consultation is always free.Back to Top