You may be able to cut down your divorce obligations through bankruptcy, depending on the type of obligation you are looking to discharge. In some cases, you can use bankruptcy to cut down on the debts you find yourself facing after your divorce is finalized. In other cases, you cannot legally discharge the debt you are facing. Speak with an experienced bankruptcy lawyer to determine your options for reducing your financial burden. No matter what, do not simply stop making your payments, especially if they are child support or spousal maintenance payments. Becoming delinquent on either of these payments can not only add to your debt load, but it is an act of contempt of court that can have criminal penalties. If you cannot afford to make these payments, work with your lawyer to have them reduced by the court.
You and Your Spouse are Liable for Joint Debts, Even After Divorce
Your divorce settlement might assign part of your marital debt to you and part to your former spouse. The settlement is a legal obligation for you to comply with its terms. Failing to repay your portion of your debt is a violation of these terms that could have consequences for your former spouse, such as creditors seeking your portion of the repayment from him or her. Talk to your lawyer about your obligation to your former spouse. Even if you can discharge your debt through bankruptcy, you might still have to fulfill financial obligations to him or her.
Consider Your Obligations when Deciding Which Chapter to File
Individuals with personal debt can file either Chapter 7 or Chapter 13 bankruptcy. In short, Chapter 7 is a more “extreme” choice because it requires that your non-exempt assets be liquidated to repay your creditors. There are also certain debts that cannot be discharged through Chapter 7 bankruptcy. Chapter 13 is an option for less dire cases. It involves the creation of a three to five-year debt repayment plan. Generally, this is the better choice for individuals facing debt after divorce because at the end of the repayment plan, the payer is generally relieved of any further financial obligation to his or her former partner.
If you have an amicable relationship with your spouse, consider discussing how your debts will be handled before you file for divorce or during your mediation sessions, if you choose this route for your divorce. You might find that they best way to handle the debt is to file for bankruptcy together before filing for divorce.
Work With an Experienced Arlington Heights Bankruptcy Lawyer
If you are considering filing for bankruptcy in the near future, discuss how the bankruptcy will affect all other areas of your life with an experienced bankruptcy lawyer first. To schedule your initial consultation with one of the bankruptcy attorneys on our team, contact Newland & Newland, LLP today. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.