Bowie, MD Divorce and Bankruptcy Lawyers

Trusted Maryland Attorneys Helping Address Financial Difficulties During Divorce in Bowie

With today's economy, both spouses may have to earn an income to support their household's financial needs. Even then, some couples experience significant financial strain. A divorce can compound a financial burden, leading one or both spouses to consider filing for debt relief through bankruptcy. If this applies to you, you are not alone, and you do not need to feel any shame.

Although the Law Office of Kari H. Fawcett does not directly handle bankruptcy filings, we partner with respected and trusted attorneys who do. Regardless of the issues you are facing while preparing for divorce, we offer our full support and guidance to smooth your path. Using plain language, we will explain complex concerns and make sure you understand how bankruptcy can affect you. We may also propose alternatives to bankruptcy to help you get the fresh start you need after your divorce. We invite you to take advantage of a free case review to learn more about your possible solutions.

Chapter 7 and Chapter 13 Bankruptcy

If you decide to file for bankruptcy, you must choose which type best addresses your situation:

• Chapter 7: In these cases, non-exempt assets may be sold, with the proceeds repaying a portion of your debts. You must meet income criteria to qualify for Chapter 7. When your case closes, which usually happens in only a few months, you will no longer be obligated to repay debts that have been discharged.
• Chapter 13: In this type of bankruptcy, you will enter a three-to-five-year repayment agreement with your creditors. This may be an option that will allow you to make up payments on certain debts while avoiding a foreclosure or other penalties. You will make monthly payments during your repayment plan, and the remainder of your unsecured debts may be discharged upon your completion of all payments.

Each type of bankruptcy has pros and cons that you need to understand fully before making your decision. With our comprehensive approach to your case, we will explain every detail and make sure you understand how filing for bankruptcy could affect you.

Considerations Related to Filing for Bankruptcy and Divorce

Couples filing for divorce often have to face and address financial challenges. Home foreclosures, vehicle repossessions, and having no money left after paying minimal bills are not ideal ways to start a new life. Medical bills, student loans, credit card debt, and legal fees can compound your issues.

Bankruptcy could resolve some of your problems. However, when deciding whether to file before or after your divorce, it is best to follow the advice of a seasoned professional. Simultaneous divorce and bankruptcy filings can affect each other in multiple ways, including:

• Asset division in divorce cannot take place before the completion of your bankruptcy case. Filing for bankruptcy will likely delay your divorce.
• If you choose Chapter 7 bankruptcy, many of your assets will be sold to pay your debts. This can further complicate property division.
• Child support and alimony obligations are not dischargeable through bankruptcy.
• The divorce court could order you to repay certain debts if you file for bankruptcy before your divorce is finalized.
• If you and your spouse file for bankruptcy together during divorce, your attorney could have a conflict of interest.

If filing for bankruptcy is a foregone conclusion, you may consider discharging your debts together with your spouse. This may be the most cost-effective and efficient way to handle your situation. It could also simplify the division of assets and any remaining debts during your divorce. In these situations, it is often best to wait until your bankruptcy case is complete before filing for divorce.

If your divorce is contentious, it may be better for you to wait until it is finalized before filing for bankruptcy. This option means you do not have to depend on your spouse to address various financial concerns during the bankruptcy process. If you are considering Chapter 7 bankruptcy, you may also need to make sure you meet the income requirements. When filing together with your spouse, your combined income could exceed the maximum limit. However, your individual income after divorce may meet the criteria.

Another issue that could arise is that creditors are not required to respect the decisions made during a divorce when they take action to collect joint debts. Although the divorce court may have ordered your spouse to repay a specific debt, your name will still be attached to that debt. If your ex-spouse decides to file for bankruptcy, the creditor can pursue collection actions and seek full payment from you.

Call Our Bowie, Maryland Divorce and Bankruptcy Attorneys

Divorce grants you a chance to start a new way of life, and filing for bankruptcy may help you pursue the available opportunities. At the Law Office of Kari H. Fawcett, our lawyers can help you explore your financial options and find a solution that works best for you. We do not charge for initial consultations, so contact us online or call 301-262-5500 today.