For Complicated Finances, You Need a Lawyer
Financial issues are a leading cause of divorce in Boston. Debt might not be the only reason that a couple decides to end their marriage, but it is a big one. There are many things to consider when deciding to declare bankruptcy before or after a divorce. To make the best decision for your future, we recommend speaking to a Boston property division lawyer. Call (617) 870-0907 to schedule a free consultation with DiBella Law Injury and Accident Lawyers, and get a better understanding of how your debt will impact your divorce and your future.
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Division of Property
In Massachusetts, debt is considered a “negative asset” and it is divided between the spouses as a part of a divorce. There are two types of debt. Marital debt is acquired while you are legally married, while non-marital debt is acquired before you are married or after you are divorced. In most cases, you are not going to be held responsible for your partner’s non-marital debts, such as student loans, credit card debt, or personal loans from before marriage.
Bankruptcy or Divorce First?
If both spouses agree that bankruptcy is inevitable, it may be a good idea to declare bankruptcy before getting divorced. Filing one bankruptcy prior to the divorce is usually going to be faster and cheaper than both parties filing after a divorce. In addition, bankruptcy can simplify some aspects of property division, as there will be fewer assets to divide. This process will also define all of the debt and assets that exist between the couple.
In some family law cases, one spouse finds out the other spouse is hiding debt during the divorce process. By filing for bankruptcy first, both spouses know all debt and assets have been addressed, so there are (usually) no financial surprises during the proceedings. But it is critical for both spouses to be in agreement, so they can complete the process in a non-hostile manner.
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One Spouse Files for Bankruptcy During a Divorce
If the divorce is already in progress and one spouse files for bankruptcy, there is a good chance that the divorce will not be finalized until after the bankruptcy is completed. The financial matters of dissolving the marriage would fall under the automatic stay provision of the U.S. Bankruptcy Code. Other matters, such as child custody, could move forward, but property division would not be finalized until the bankruptcy is completed.
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Bankruptcy After a Divorce
Either or both spouses are free to start bankruptcy proceedings after a dissolution is finalized. But it is important to know that debts such as back child support cannot be discharged in bankruptcy. However, debts related to the division of marital property could be subject to discharge in some cases.
Both bankruptcy and divorce are complex legal matters, and needs will vary from one couple to the next. It is critical to your financial future that you consult with a Boston divorce attorney prior to deciding when to take legal action. In some cases, there could be a distinct advantage to processing one or the other first. But you will only know what is in your best interests when you are working with a lawyer. Contact DiBella Law Injury and Accident Lawyers, at (617) 870-0907 to schedule your free consultation.
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