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Wednesday, February 4, 2015

Bankruptcy and Divorce-- Beware Pitfalls and Know Your Rights First

Disadvantages of Filing for Divorce and Bankruptcy at the Same Time

When you file for bankruptcy, almost all property you own becomes property of the bankruptcy estate.
 If you are in the middle of a divorce, the family court judge  usually can’t divide and distribute your assets until
your bankruptcy is completed.
As a result, filing for bankruptcy during an ongoing divorce can drag it out unnecessarily.
Similarly, unresolved alimony or child support issues can lead to delays in the processing
 of your bankruptcy case. However, in most cases, child support and alimony are handled even during
bankruptcy. If relief from stay is required, consult your attorney first. Do not secretly file bankruptcy
and not tell your attorney as this can lead to severe legal consequences!!!!

Should You File for Bankruptcy or Divorce First?

The answer depends on your individual circumstances. Filing a joint bankruptcy before divorce can
 allow you to reduce court costs and attorney fees, simplify your divorce by discharging joint debts,
and protect more of your property if your state allows you to double your bankruptcy exemptions...
It is best to consult both family law attorney who knows bankruptcy or consult both bankruptcy and
family law attorneys.

Filing bankruptcy Jointly?

In certain situations, it can also make sense to file for divorce first and then file for bankruptcy individually.

 If you maintain a single household and your joint income is too high to qualify for Chapter 7 bankruptcy
together, you may be able to qualify individually after setting up  separate households following the divorce.

Also, if your divorce will include alimony or child support considerations, it can be helpful to have
those amounts finalized before filing for bankruptcy. If a settlement MSA/judgment has already been
finalized and entered, the Bankruptcy Code is very specific on what can and what cannot be
discharged. Spousal support, child support and certain debts are treated differently for example. Some
attorney fees are also treated differently upon offer of proof.  For example, attorney gets paid even after
client's ex husband files bankruptcy.

Attorney is familiar with issues within divorce and bankruptcy, and has seen cases in bankruptcy filed by one spouse, without telling the other spouse. Clients seeking spousal support who are in bankruptcy can get their legal fees which were used to obtain spousal support, paid in bankruptcy if in a chapter 13; otherwise, such fees are not dischargeable in bankruptcy and must be paid, and most courts will fashion an order for same, or counsel will arrange for payments since the debt cannot be retired in reality. A lien can arise for this if required, under certain circumstances.

At our Chico, California  office you can get the effective representation that you need and the affordable fees you deserve. Family law and divorce attorney
 specializes in resolution of all aspects of family law as amicably as possible in your particular
 Experienced . Whether you have been charged with a crime, are considering divorce.