First Comes Divorce, Then Comes...Bankruptcy?


When it rains it pours, at least that is what we often tell ourselves when we are going through a particularly rough patch in life.  Unfortunately, many residents in Oak Park, Chicago, and throughout Illinois face difficult circumstances all at once, making it incredibly tough to understand how to proceed to break free and get a fresh start.


For example, it is quite common for a divorce and bankruptcy to coincide with one another.  This is usually the case for one of two reasons (or both).  First, the intense financial pressures themselves could cause the divorce.  Obviously fights about money are common among couples, and those fights could reach the point where the marriage ends.  Additionally, the process of going through a divorce itself can be quite expensive.  Beyond the legal fees and costs, it is simply far more expensive to live alone than as a unit.  Paying for two different places to live, multiples bills, and more can throw even previously secure individual into financial limbo.  If debts pile up, then bankruptcy may be the logical option.  

Considering that the finalization of a divorce can take some time, all of this often leads to the question: Should I file for bankruptcy before the divorce or after?

Now or Later?
This is not a question that you should push off.  That is because there are somewhat different rules for filing for a “joint bankruptcy”--where you and your soon-to-be-ex partner file bankruptcy as a single unit.  One of the key benefits is that a joint bankruptcy can eliminate various debt accumulated during the marriage itself.  This process may greatly simplify the allocation of assets during the divorce.

Similarly, filing together may alleviate some of the fear of an uncertain bankruptcy court outcome if bankruptcy is filed only by one partner after a divorce decree.  The bankruptcy court is not necessarily bound by the divorce decree, and so there is a legitimate fear that one partner may be left holding the bag on all of the debt if the other files afterwards.  It is not out of the question, for example, for debt to be split between the parties during divorce but then shifted solely onto one party after one of the partners files for bankruptcy.  The court has flexibility when making these decisions, but it is critical that local residents think through the implications.

A Fresh Start
Obviously, in our area an Oak Park bankruptcy attorney should be sought out so that you can understand exactly what the implications might be, and make informed decisions about how to proceed.

There is no getting around the fact that divorce and bankruptcy can be incredibly stressful and contentious processes in their own right.  When handled together, it is easy to feel overwhelmed.  However, at the same time, divorce and bankruptcy are similar in that they both may offer a much needed fresh start.  Beyond the negative connotations, there comes a time in many lives when it is simply time to re-work things and focus on a new direction.  Whether that is in a relationship or a financial quagmire, it is important to make clear, informed choices every step of the way.

Comments

Post a Comment

Popular posts from this blog

Phantom Debt Collection Scams on the Rise in Illinois

Have you been contacted by a person claiming to be a debt collector who is seeking to recover a debt you allegedly owe? If so, you are not alone. According to a recent report from CBS Chicago , such parties claiming to be debt collectors are on the rise, and they are scamming Chicago-area residents. These alleged debt collectors are part of schemes known as “phantom debt collection scams,” since they involve the attempt to collect on a debt that the consumer does not actually owe. How can you avoid becoming a victim in a debt-collection scam ? What should you do if you have been targeted by a fake debt collector? How Do Phantom Debt Collection Scams Work? Now, you might be thinking to yourself: I would never agree to make payment on a debt that I did not owe. But the scam is not always that simple. Parties at the center of debt-collection scams often target consumers who do actually owe debts (to someone or to some entity), and they prey on the fact that these c...
Read more

Payday Lending and Predatory Lenders in Illinois

If you are in substantial debt in the Chicago area and are living in a paycheck-to-paycheck cycle, you may have taken out a payday loan to make ends meet. While payday lending is illegal in a number of states due to the predatory nature of these loans, it remains legal in Illinois. As a result, many debtors in the state have used payday lenders, and far too many of those borrowers cannot repay what they owe. According to a recent article from Progress Illinois , consumers have filed complaints about payday lenders in the state, illuminating a need for federal rules that address harmful lending practices . Predatory Payday Lenders and Protections for Consumers Due to the perceived predatory nature of payday loans, twelve states in the country have banned these lenders from operating completely, according to a fact sheet from loans.org . The states that currently have laws prohibiting payday lenders from operating include Arkansas, Arizona, Connecticut, Georgia, Mary...
Read more

Learning About Different Types of Wills

Whether you are young or old, single or married, wealthy or with limited financial means, healthy or dealing with a medical condition, it is important to make a will. Many people have incorrectly heard that wills are only necessary for particular people, such as those with a substantial amount of assets or for older adults in poor health. Yet wills are critical for adults of all ages, and an experienced Oak Park estate planning lawyer can help you to make one. Before you begin working with a lawyer on a will, you might start conducting your own research into wills in Illinois and the requirements for a valid will. In so doing, you are likely to come across information about many different types of wills, and you are probably going to wonder whether you will need more than one kind of will. In short, there are different terms that can be used to describe the form or function of a will, as well as some distinct types of wills. Our Oak Park estate planning attorneys can explain in more ...
Read more