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Returning to single status following divorce often means a change in income. Filing for bankruptcy could be a way to regain control of your finances while stopping harassing calls from creditors, wage garnishments, and property repossession as you adjust to a new life. To understand whether bankruptcy is the best option for you, below is a look at how it can play a part in divorce proceedings. 

How Divorce Affects Bankruptcy

During the divorce proceedings, the Court will divide debt as well as assets. This means each party can be held legally responsible for paying certain bills, irrespective of whose name the bill is in. However, creditors are not bound by such agreements or rulings as they are not a party to them. They are entitled to pursue whoever is the name on the debt; irrespective of any divorce agreement or ruling. Therefore, Bankruptcy is often the only way to ensure you are not pursued for a debt your ex-spouse agreed to pay, but did not.     

How to Determine Which to File First

Rochester-New-York-bankruptcyFiling for bankruptcy or divorce can be emotionally and mentally draining. Going through both proceedings at the same time can save time and future stress. Ideally, you should file for bankruptcy in advance of dissolving a marriage and do it with your soon to be ex-spouse while you are eligible to do so. During bankruptcy proceedings, an automatic stay is placed on assets, and any pending legal action, including a divorce. This will require the Court to wait until the Bankruptcy is over. Filing jointly for Chapter 7 or Chapter 13 bankruptcy while still legally married will generally help save money by splitting fees. 

Depending on how much money you make, there are circumstances when it’s best to file for divorce first. This is the case when joint income exceeds qualifications for Chapter 7 filing. If you are a significantly lower earner than your spouse, you also could be eligible by filing separately. Talk to an attorney who is versed in both Bankruptcy and Divorce issues.

 

If you want to dissolve a marriage in New York state, contact Thomas A. Corletta, Attorney & Counselor at Law in Rochester. With almost 40 years of experience, the divorce attorney has extensive knowledge of both bankruptcy and family law, and understands the interplay between the two, which many attorneys do not. To ask questions and arrange a meeting for legal advice, call (585) 546-5072. Visit this Monroe County criminal and civil trial practicing online for information on additional specialties and keep in touch on Facebook for announcements. 

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