For probably far too many married couples, bankruptcy and divorce are inextricably linked. As everyone knows, financial difficulties are a leading reason for divorce.
There is no way around it. A divorce is going to be costly. After dividing the marital assets in half, in many cases, both ex-spouses may find themselves in a difficult financial position.
You are about to learn what is involved with the division of marital assets in an Indiana divorce, and you’ll also learn why bankruptcy is an option that is so frequently chosen by divorcing spouses in this state.
IS A DIVORCE THE ANSWER TO YOUR FINANCIAL PROBLEMS?
As noted previously, money is probably the leading cause of stress in a marriage. In many marriages, each partner eventually comes to believe that the money problems are the other partner’s fault.
Many married couples in Indiana slip unintentionally and incrementally into debt. If several missed car payments or mortgage payments combine with a serious illness or injury, almost any couple could find themselves rapidly drowning in debt.
Sometimes a divorce really is the best solution to the financial difficulties in a marriage, but sometimes the marriage itself is not the real problem – it’s the spending.
You can divorce the person you married, but what you cannot escape from in the state of Indiana are your joint marital debts.
When you consider divorce, you must consider that in Indiana and every other state, both partners are liable for any debts that are incurred while they are married. And here’s something else that you need to know before you proceed with a divorce.
WHAT RIGHTS DO YOUR EX-SPOUSE’S CREDITORS HAVE?
Although a divorce settlement will essentially split the marital debts and make each ex-spouse responsible for roughly fifty percent, that settlement is not binding on creditors.
In other words, if your ex does not pay his or her part of a marital debt, you can expect a creditor to “come after” you without regard to how the court settled your divorce.
In fact, if your ex declares bankruptcy subsequent to your divorce, you will be the only person that a creditor can – and will – pursue for that debt.
So if your finances are tight in the first months after a divorce, an ex-partner’s bankruptcy might be the final straw. At that point, you might have to declare bankruptcy, too.
WHAT ARE THE ADVANTAGES OF A JOINT, PRE-DIVORCE BANKRUPTCY?
That’s why both partners might actually want to consider declaring bankruptcy prior to filing for divorce. It may, in fact, be a better option for both of you, and here’s why:
1. You will both know where you really stand financially.
2. You will both know what to expect from the division of assets during your divorce.
3. You will both be able to start planning your futures – realistically.
In many cases – certainly not all – the bankruptcy should come first.
If your money troubles can be resolved through bankruptcy, it’s possible that the marriage might survive. And even if it doesn’t save the marriage, there are a number of reasons to consider a joint declaration of bankruptcy before divorcing.
CAN A JOINT, PRE-DIVORCE BANKRUPTCY SAVE YOU MONEY?
Another consideration is that a joint bankruptcy filing is substantially less expensive than paying for two separate bankruptcies. A pre-divorce joint declaration of bankruptcy also reduces the cost of a divorce because it simplifies the division of marital assets, properties, and debts.
Of course, if the relationship with your spouse is so damaged that you cannot communicate with one another, this option probably is not open to you.
If you are filing for bankruptcy either jointly or individually and immediately before or during your divorce, discuss the matter first with your divorce attorney, and then keep your attorney abreast of your decisions.
The bottom line is that no one wants to be harassed by bill collectors over an ex-spouse’s debts.
HOW CAN A GOOD DIVORCE LAWYER HELP YOU?
Here in Indiana, if you believe that your ex will file for bankruptcy and leave you to the mercy of the creditors, discuss bankruptcy – and any other aspect of your divorce – with a skilled divorce lawyer, and have that discussion as early as possible in the divorce process.
There is no one-rule-fits-all answer when deciding whether to file for a bankruptcy first or a divorce first. Everyone’s situation is personal and unique, so you must have the personalized advice of an attorney.
Your attorney will explain your options and may offer some helpful suggestions. In some cases, your attorney may recommend that you acquire a lien on part of your ex-spouse’s property – just to make sure that you will be treated fairly.
AFTER A BANKRUPTCY, WHAT OBLIGATIONS STILL MUST BE PAID?
Everyone who is divorcing in Indiana should understand that bankruptcy cannot get either spouse out of the obligation to make court-ordered child support or spousal support payments. Court-ordered obligations are not “dischargeable” debts in a bankruptcy.
After a divorce, you can ask an Indiana court to change or “modify” custody and support orders in specific circumstances, but no spouse may simply ignore a court order.
When a court has to take action to enforce a court order, the consequences can be harsh – and could even include jail time for contempt of court – but if you need a custody or support order enforced – or modified – discuss the matter with your divorce attorney.
WHAT SHOULD BE YOUR GOAL IN A DIVORCE OR A BANKRUPTCY?
There really is life after bankruptcy, and there really is life after divorce. Both bankruptcy and divorce are designed to give you a fresh start and a way to move positively and constructively into the future.
If you are divorcing, considering a divorce, or even if you are anticipating that your spouse is going to file for divorce, you should speak at once with an experienced Lake County divorce attorney to discuss all of your rights, options, and alternatives.
Divorce is never easy. The financial details of every divorce are complicated and often in dispute. If children are involved, divorce is even tougher. An acrimonious divorce trial can drag on for months.
That’s why you must have a qualified and committed divorce attorney advising you and advocating on your behalf. If a divorce is in your future, get the advice you need – and get it now.