Divorce is a common reason some people file for bankruptcy relief. After a divorce, a person may have debts they cannot pay on a single income. Filing bankruptcy can eliminate those debts so you can transition from a two-wage-earner household to a single-income household.

However, there are some important things that you should know about filing for bankruptcy after a divorce in Lawrenceville, GA. 

Before you file for bankruptcy after a divorce, it is essential to tell your bankruptcy lawyer about the divorce. Your bankruptcy attorney might contact our Lawrenceville divorce lawyer to discuss the divorce terms and advise you of any potential issues or problems related to the divorce and bankruptcy. 

A few important things to know about filing bankruptcy after a divorce in Lawrenceville include:

Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy 

A Chapter 7 bankruptcy is called a “straight” or liquidation bankruptcy. You are not required to pay any debts discharged through the bankruptcy case, including credit cards and medical bills. However, a Chapter 7 trustee can seize assets that are not exempt. 

Bankruptcy exemptions protect specific amounts of equity in some assets. The good news is that most Chapter 7 cases are no-asset cases because they do not have any assets with equity above the exemption amounts.

A Chapter 13 bankruptcy is a reorganization. You file a proposed Chapter 13 plan that includes payments to a Chapter 13 trustee for three to five years. Chapter 13 cases can help you avoid foreclosure and repossession.

What Happens to Spousal Support and Child Support Payments in Bankruptcy?

You cannot discharge spousal support or child support payments in bankruptcy. Instead, you must continue to pay these amounts according to the family court order.

However, if you are behind on child support or alimony payments, a Chapter 13 bankruptcy case might help. You can include the past-due payments in your Chapter 13 plan. Therefore, your ex-spouse receives a monthly payment from the Chapter 13 trustee until the past-due support payments are paid in full.

However, you must resume your regular child support and alimony payments outside the Chapter 13 plan. If you fall behind on support payments again, the bankruptcy court could dismiss your Chapter 13 case. 

What Happens to Unsecured Joint Debts in Bankruptcy That I Owe with My Ex-Spouse?

Unsecured debt is money you owe to a creditor that is not secured by collateral. Filing bankruptcy discharges most unsecured debts including:

  • Medical bills
  • Personal loans
  • Most personal judgments
  • Some old income tax debts
  • Old lease and rent payments
  • Credit card bills

If you owe the debt together with your ex-spouse, there could be a problem. Your bankruptcy case gets rid of your legal responsibility to repay the discharged debt. 

However, if your ex-spouse co-signed the debt, they are still liable for it. Therefore, the creditor could sue your ex-spouse for the total amount owed on the account. 

Your bankruptcy case does not discharge your legal responsibility under a family court order. Therefore, if the divorce decree said that you must pay the joint debt or a portion of the joint debt, filing bankruptcy might not release you from the family court order.

Take a copy of your divorce decree to the bankruptcy lawyer when you meet with them for a free consultation. Discuss how your bankruptcy impacts joint debts with your ex-spouse before filing bankruptcy. 

Secured Debts You Owe With Your Ex-Spouse in a Bankruptcy Case 

If you owe money on a debt secured by your home, vehicle, or other assets, filing bankruptcy does not necessarily release the lien. You must continue paying the creditor to retain the collateral. There are limited circumstances where you could pay the creditor an amount equal to the value of the item to release the lien.

Your property division agreement could impact your bankruptcy if you were ordered to pay secured payments for a home mortgage or car loan. Again, discuss these debts with your bankruptcy lawyer to determine how your bankruptcy case impacts your ex-spouse.

Should I File Bankruptcy Before I Get Divorced in Georgia?

Some couples are in severe debt when they decide to divorce. Unfortunately, it may be the case that neither spouse can repay the debts. Therefore, bankruptcy might be the best option for both spouses.

Filing a joint bankruptcy case could get rid of all unsecured debts; neither spouse would be required to repay the discharged debts. In some ways, filing bankruptcy before a divorce action could simplify the divorce proceedings.

However, discussing the matter with a bankruptcy lawyer and a Lawrenceville divorce attorney is always in your best interest. Ensure your bankruptcy attorney understands you intend to file for divorce after the bankruptcy is complete. Likewise, talk with your divorce attorney about the bankruptcy filing.

When you, your spouse, and your attorneys agree, filing bankruptcy before a divorce could benefit you and your spouse. 

Contact the Lawrenceville Divorce Lawyers at Crystal Wright Law To Get Legal Assistance Today

To learn more and get the help you deserve, call our divorce & family law firm at (404) 594-2143 or reach out to Crystal Wright Law online by visiting our contact us page.
You can also visit our law firm at 440 S. Perry Street Suite 105, Lawrenceville, GA 30046.