Financial issues are one of the leading causes of divorce and ending a marriage can create considerable stress for both spouses when splitting income between two separate households. That’s why divorce is also a commonly cited reason for bankruptcy in North Carolina.
If you are experiencing financial difficulty and considering divorce, or have already filed, it’s vital to understand what options are available and how one can affect the other. The goal should be to avoid making poor decisions that create more stress and financial burdens.
Tips when considering bankruptcy and divorce
If you or your soon-to-be ex-spouse is considering filing for both bankruptcy and divorce, here are some essential facts to consider:
Don’t file for both at the same time: Bankruptcy and divorce can both be complicated processes to go through, and as a general rule, two legal matters shouldn’t happen at the same time.
Your situation determines which filing comes first: In many instances, people file for bankruptcy first as it freezes assets and keeps creditors from contacting you. If your divorce is an amicable split, it can help you save money.
Chapter 7 takes less time: Typically, a Chapter 7 bankruptcy filing eliminates dischargeable debt in three to six months, allowing a divorce to happen sooner. Chapter 13 sets up a payment plan of three to five years.
Not all debts are included: Not all debt can be eliminated in a Chapter 7 filing. The most common types not included are:
- Child support
- Student loans
- Court fines, fees or penalties
Seek compassionate and knowledgeable legal advice
Filing for divorce can be one of the most painful experiences a person can ever go through, especially if children are involved. Adding further financial stress, such as filing for bankruptcy, can cause even more anxiety over your future. A North Carolina divorce attorney who also specializes in bankruptcy law can guide you through the complicated process, and help you understand what options are available to make sure you start your new life with financial freedom and hope for a promising future.