It’s bad enough to have to go through a divorce, but having to also deal with a bankruptcy can be a nightmare. So if you’re having marital issues and think you’re headed into bankruptcy, which should you address first? Some financial experts say it makes sense to file for bankruptcy before a divorce. Here’s why:
If you have already filed for divorce, a bankruptcy filing may put your divorce on hold until the bankruptcy is settled.
Filing a joint bankruptcy can allow both of you wipe out certain debts. But if your spouse files for bankruptcy after divorce proceedings begin, you could end up liable for the full amount of joint debts.
Filing a joint bankruptcy will be cheaper than filing separately after a divorce.
Getting rid of as much debt as possible in a bankruptcy can help make it easier to divide any remaining debts and property during a divorce. A bankruptcy court must declare a property as exempt, or not available for liquidation to pay debts, before a divorce court can decide how to divide it.
Try to get help with your debt from a credit counselor before resorting to bankruptcy or divorce. Financial and marital problems are often closely related, so for some couples, getting help with debts can keep the situation from escalating to the point where they’re meeting up before a judge. Besides, federal law requires debt counseling before a bankruptcy can be filed to discharge debts, so you may as well get some help.
Also, since the laws on bankruptcy and divorce can vary from state to state, it’s important to find attorneys and credit counselors who have the knowledge to assist you with your specific situation.
About the Author:
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.
Critics of the debt settlement process and industry often like to point out that debt settlement will do tremendous damage to your credit history and credit score. They cite this as one of the main reasons to explore other options. Unfortunately, for many consumers, the alternatives can be just as damaging or leave them stuck with their debt for years.
How does debt settlement impact one’s credit score?
Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.