It’s common for debt to mount during divorce, even if your situation is relatively simple and you and your spouse agree on a divorce settlement. If you are one of the unlucky few who has fought a long battle in divorce court, your situation is likely much worse and chances are you are feeling pretty overwhelmed about your debt situation.
The good news is you are not alone and you are certainly not the first person to be saddled with a lot of debt following a divorce. There are many types of divorce debt and each is treated differently. If divorce debt is driving you into bankruptcy, here’s what you need to know:
Different Types of Debt
Unfortunately, some of the debt you accumulate during a divorce and some of what you could be responsible for as the result of your divorce settlement might not be dischargeable in a bankruptcy.
What this means is that if you qualify for Chapter 7 bankruptcy and are allowed to discharge your unsecured debt (not pay back what you owe), some types of debt will not be discharged and you will still owe the money. Child support is an example of this. If you fall behind in child support payments following your divorce, you still owe them even if you file for bankruptcy. Alimony or spousal support is the same, so don’t think you’ll “stick it to your ex” by filing for bankruptcy and avoiding alimony.
Attorney’s fees are a huge part of what you owe following a divorce. Most of the time your attorney’s fees are dischargeable in a bankruptcy. However, if you have agreed to or are ordered to pay your spouse’s attorney’s fees as part of the divorce settlement, they are generally not dischargeable.
If pension benefits are part of your divorce settlement and are affected by your bankruptcy, the situation can get complicated. In some cases debt related to pension benefits could be dischargeable, but it’s going to depend on your settlement, the issue of equitable distribution, and whether or not there is any debt involved in the situation. Any time a bankruptcy affects retirement income, it is essential you work with an experienced bankruptcy attorney.
One Last Thing
You might be thinking your divorce lawyer can help you with your bankruptcy or vice versa since you are already working with that person and he or she is already familiar with your situation. This can be risky because in most cases, divorce lawyers know only the basics of bankruptcy law and a bankruptcy attorney knows only how bankruptcy and divorce affect each other. Two attorneys can work together if your divorce and bankruptcy are happening around the same time, but you really need separate attorneys who are experts in each field.
Do you have questions about how bankruptcy affects your divorce or vice versa? Is your former spouse filing for bankruptcy and you want protection? We can help. Contact the Law Offices of Robert M. Geller at 813.254.5696 to discuss your situation and get the guidance you need.