Divorce is a leading cause of bankruptcy in America. Many find that financial issues contribute to marital breakdown, and the aftermath can be equally challenging. For single mothers, bankruptcy can be a daunting consideration.
You may already be your children’s sole or primary financial provider, making the stakes even higher. Understanding your options and rights when facing these challenges is crucial.
Which comes first? Divorce or bankruptcy.
Deciding whether to file for divorce or bankruptcy first isn’t cut-and-dried. Pursuing both simultaneously is generally not advisable due to the financial and emotional strain involved.
Consulting with a skilled bankruptcy attorney can help determine the best course of action. If you file for bankruptcy before divorce, it may simplify property division by eliminating shared debts.
However, filing after divorce might be beneficial if your income qualifies you for Chapter 7 bankruptcy individually. Each situation is unique.
What is the difference between Chapter 7 and Chapter 13?
Understanding the differences between the two primary forms of bankruptcy is crucial for making informed decisions. Each type offers distinct paths to debt relief, with unique advantages and disadvantages for single moms.
Here are the fundamental distinctions:
Chapter 7 bankruptcy
Often called “liquidation bankruptcy,” Chapter 7 aims to eliminate unsecured debts like credit cards and medical bills. It’s typically completed in a few months, providing swift relief. For single moms, this can mean a fresh start without the burden of overwhelming debt.
The disadvantages include that your non-exempt property may be sold to pay creditors, and you must pass a means test to qualify.
Chapter 13 bankruptcy
Chapter 13 involves a repayment plan lasting three to five years, allowing you to keep your property while catching up on debts. This is ideal if you have a regular income and need time to repay debts.
Advantages include keeping your home and car if you can afford a manageable payment plan. Disadvantages include having a steady income to keep up with payments, and the process takes much longer compared to Chapter 7.
Choosing between the two depends on your financial situation, assets and income stability.
Other key concerns for single moms
As a single mother, your financial concerns during divorce and bankruptcy are significant. Child support and alimony are critical areas to consider. In Florida, neither is dischargeable in bankruptcy. This ensures that support for you and your children remains intact.
Bankruptcy might help reduce or eliminate other debts, but it’s essential to understand its impact on your overall financial situation. Additionally, if you’re facing creditor harassment, home foreclosure or tax issues, bankruptcy can offer relief.
An experienced attorney can help you emerge from divorce and bankruptcy in the best possible financial position to achieve economic stability and provide for your family’s future.
