Sherman Oaks Bankruptcy During Divorce Lawyers
Financial disagreement is one of the leading causes of failed marriages, after all. But despite the disagreements you may be having with your spouse, it is important for couples going through both divorce and bankruptcy to discuss the timing of their divorce and bankruptcy filings. The Sherman Oaks bankruptcy during divorce lawyers at Wadhwani & Shanfeld can help you determine which should come first, based on your debt, assets, income, and other financial characteristics.
Your Income, Debt, and Assets Determines What Bankruptcy You Qualify For
For most divorcing couples, there are two relevant types of bankruptcy to file for: Chapter 13 and Chapter 7. The income, debts, and assets of the married couple determine what type of bankruptcy they are able to file for. Chapter 7 bankruptcy allows the debtors to fully discharge their debt quickly in three to five months, whereas Chapter 13 takes much longer—three to five years—and also requires a repayment plan. The size of your household income, the number of people in your household, and the total amount of debt you have all impact what type of bankruptcy you can utilize.
- Chapter 7 Bankruptcy—Used to discharge unsecured debt such as credit card debt and medical debt. In a Chapter 7 bankruptcy, all of the debtor’s debt is discharged quickly, impacting their credit score but allowing them to retain the majority of their personal property. If your income level is over a certain level, you will not qualify for Chapter 7.
- Chapter 13 Bankruptcy—Used to discharge or reduce secured debt, such as vehicle loan or home loan. Chapter 13 allows the debtor to retain their property in questions, such as saving their home from a foreclosure sale, but requires a three to five year repayment plan, in which some or most of the debt must be repaid to the lender. After the repayment plan ends, the remaining debt is discharged. Chapter 13 may be the only viable option if your income level is over a certain level.
When to File for Bankruptcy
- Household Size—You can only file a joint bankruptcy—and take advantage of the additional people in your household—while you are still married. As such, if you are on the cusp of being able to file for Chapter 7 bankruptcy while you were married, you may no longer qualify if your income is roughly the same but there are now fewer people in your household. In this scenario, it would be better to file for bankruptcy first, then proceed with the divorce.
- Protecting Assets—During divorce, marital property is distributed equitably between the two parties. During bankruptcy, the court may allow a creditor to seize these assets. As such, it may be in your best interest to file bankruptcy before divorce and asset distribution, because in this latter scenario, each party keeps what they walk away from the marriage with.
- Debt Distribution—Like marital assets, marital debt is distributed equitably in divorce. If a couple gets divorced before bankruptcy, one ex-spouse may end up having to pay for the other’s debts, or suffer the consequences of that party defaulting on lines of credit in which both parties are named.
Call a Sherman Oaks Bankruptcy & Divorce Attorney Today
Bankruptcy and divorce often go hand-in-hand. If you are going through both, a Sherman Oaks bankruptcy and divorce attorney can help. Call Wadhwani & Shanfeld today at 899-996-9932 to schedule a free consultation.