How a Bankruptcy will Affect Your Divorce Proceedings in Arizona
Many people wonder whether they should file for bankruptcy before getting a divorce or after finalizing the proceedings. The answer to this question depends on many factors and a consultation with an experienced attorney will usually shed some light on the best course of action. Read on to knowA�how a bankruptcy will affect your divorce.A�
Bankruptcy and its Effect on Spouses
Before moving on to examine bankruptcy and divorce proceedings, leta��s take a look at how it impacts spouses who are currently married to each other, andA�how a bankruptcy will affect your divorce.
In Arizona, if one spouse files for bankruptcy, the other one doesna��t have to. A bankruptcy filing also doesna��t affect the other person when it comes to the repayment of personal debt. In addition, your decision to file for bankruptcy is not going to impact your partnera��s credit rating. Every single person in Arizona has their independent credit rating, which means that personal debt is examined independently of the financial situation of a spouse.
Moving on to divorce, this is one of the primary reasons for many individuals to file for bankruptcy. Having to rely entirely on oneself for financial support and bill payment can result in serious hardships and even massive debt for one of the former spouses or the other.
Divorce and Bankruptcy Filing in Arizona
While the marriage is legally intact, the two spouses can file for joint bankruptcy. Many individuals opt for this possibility as an option to deal with joint debt before the dissolution of the marriage.
This option could be suitable for individuals looking to file for Chapter 7 bankruptcy. Chapter 13 bankruptcy comes with a debt repayment plan. As a result, individuals who no longer share a household and finances may find it difficult to keep up with the repayment plan.
One other thing to keep in mind when filing for joint bankruptcy before getting divorced is that various assets will be frozen as a result. The only property that will be eligible for division between the spouses is the one thata��s exempt from the bankruptcy filing.
If shielding assets from creditors is something that you want to do, you may file for bankruptcy together before getting divorced. A lawyer will tell you how to proceed, what needs to be done and whether the bankruptcy will contribute to any financial benefits.
In the situation of the divorce being complete and filing for bankruptcy after, they may be some complications that the spouses will face. Creditors could potentially pursue the former spouse that hasna��t filed for bankruptcy, regardless of the fact that the couple is no longer together.
One of the worst options according to legal experts is filing for bankruptcy in the middle of divorce proceedings. Usually, filing for bankruptcy will put the divorce on hold. Divorce proceedings can continue whenever the bankruptcy case is completed or if a divorce attorney asks the court to move forward with the legal separation.
A Few Essentials to Keep in Mind
A very important fact to keep in mind is that domestic support and custody obligations arena��t exempt from the bankruptcy. Alimony and child support will still have to be paid in the full amount that the court has determined.
Additionally, after the dissolution of a marriage, community debt accrued during the marriage becomes joint debt. The divorce will also lead to the apportioning of the debt between the two spouses. This is the main reason why the non-filing former spouse may still be pursued by creditors and asked for repayment.
In such instances, two separate filings may be required after the divorce to keep creditors from pursuing one of the spouses.
As you can see, there are numerous complications and specific situations that will play a role in determining whether filing for bankruptcy before, during or after divorce proceedings is a good idea. Discuss the specifics of your situation with a lawyer and youa��ll get a much better idea about the options andA�how a bankruptcy will affect your divorce andA�how theya��ll impact your financial well-being.