Bankruptcy and Divorce

How bankruptcy and divorce laws combine

Divorce is one of the three major causes of bankruptcy - accounting for approximately one-third of all cases filed. Divorce usually requires additional housing, attorney fees and support (temporary spousal and child support) which creates additional financial responsibilities for a family during a difficult emotional transition. If one or both spouses also file for court protection, bankruptcy and divorce laws combine to great a significantly more complex administration in both types of proceeds. Most often, two attorneys collaborate to craft a single, cohesive legal plan to balance often conflicting legal interests for one client.

What happens if only one spouse files bankruptcy?

During a pending divorce proceeding, cooperation is between spouses is notoriously difficult. Because property and liability division is less than an exact science, one spouse or the other may conclude their financial condition is untenable. If filing Chapter 7 alone, the remaining spouse (who does not file Chapter 7) will remain liable for all debts incurred by the marriage. The legal concept of "privity of contract" prevents third party creditor claims from being compromised by a unilateral decision of one spouse.

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