Challenging life events often lead to bankruptcy filings. People with a sudden influx in expenses or a reduction in income may need the financial relief provided by bankruptcy.
A divorce creates new financial obligations while simultaneously reducing a person’s household income. Many people struggle to rebuild financially after a divorce, especially if they must assume partial responsibility for a spouse’s debts.
For those trying to find a clear path forward, a personal bankruptcy post-divorce can be an effective way to reduce financial obligations and prepare for a brighter future.
Marital debt can cause issues for years
The property division process during a divorce does not just result in a split of personal assets. Spouses must also divide their financial obligations. A spouse who was responsible with their money may suddenly have partial responsibility for credit card debt assumed by a spouse who spends unnecessarily.
The debts accrued during the marriage can become the responsibility of the spouse who didn’t have their name on the card, sometimes even years after the divorce in some cases. Creditors dealing with someone in default may look for alternate parties who have responsibility, including the spouse who did not make those charges initially.
A personal bankruptcy eliminates financial responsibility for personal debts and can also prevent a spouse’s creditors from making claims about marital debts in the future in some cases. While people can’t discharge support owed to a spouse or children, they can limit their responsibility for a spouse’s debts.
The right inclusions on bankruptcy paperwork and have a profound, positive impact on the financial recovery of a spouse overwhelmed by debts they did not take on themselves. Reviewing financial records and divorce paperwork with a bankruptcy attorney can help those frustrated with post-divorce debts better understand their options.
