Divorce and Bankruptcy tend to go together. Money problems tend to impact every area of our lives so it is not a surprise that money problems are consistently listed as one of the major cause of divorce.  Sometimes one spouse accumulates a large amount of debt on a credit card and the parties then simply cannot come up with a way to repay it.  Other times medical circumstances of one spouse or child overwhelm a couples finances and there is no way to make payment on the family medical debts.  The stress of debt make every area of our lives harder. So in these types of situations bankruptcy may be the best option for all parties involved.

Sometimes Divorce and Bankruptcy Over-Lap – then What?

Being burdened with debt is hard by itself. Going through a divorce simultaneously can make it worse. That is where working with an experienced Utah bankruptcy attorney can help.

Do you File Divorce or Bankruptcy First?

When couples reach the point where divorce and bankruptcy both become an option, their most common question is whether they should file divorce or bankruptcy first? Usually I find most people want to get divorced first and then deal with the debt later. However, as a general matter, I often recommend filing bankruptcy before filing for divorce.  (But the kind of bankruptcy you file will matter, be it Chapter 7 or Chapter 13.) For two reasons this tends to work for most people: (1) Eliminating as much debt as possible means that there is less issues to deal with in the divorce, and (2) you may not be able to get rid of this debt later if you are ordered to pay it through a divorce decree.  However all situations are different and working with an attorney that understands bankruptcy and divorce is important.

You Need to Understanding the Limitations of Divorce and Bankruptcy.

If you file bankruptcy during a divorce proceedings or after, you could still end up being responsible for debts that were assigned to your ex-spouse by the domestic court. If your name is on a loan, that’s all that matters to most creditors and they will not care what your divorce decree says. So, for example, if your ex-spouse stops making the car payment the creditor will then come after you for payment if your name was on the loan.

You also need to understand that alimony and child support payments also cannot be eliminated in bankruptcy. While the Law Office of Douglas Barrett, LLC does not practice family law in Utah we will refer you to family law attorneys to help you make the best decision.

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