Marital problems can often arise when financial hardship strikes and spouses become stressed with how to find a resolution. While debt burdens can already be hassle enough, adding a potential divorce to the matter can greatly complicate things. Whether you are looking to divide debts and move on or file for bankruptcy it is important to discuss your situation with aLouisville bankruptcy lawyer to ensure you dissolve the relationship appropriately.
When filing for divorce part of the dissolution agreement will outline how the debts and assets will be divided. Generally, the court will divide the debt proportionately to the income of each spouse. While this may sound fair it isn’t always the case when individually held debts add to the burden of one of the spouses. Debts accumulated before the marriage often become considered jointly held debt, whereby both parties contribute to the payments and liability over the debt. In a divorce, these debts don’t always get pinned to the sole member who accumulated them prior to the marriage and, instead, become part of the division of debt. If the originally liable spouse defaults on the debt, the non-liable spouse could still be held liable in the eyes of the creditor. For this reason, it is best to seek for only jointly held debts be divided as part of the divorce decree and all individually held debts go with the original borrower.
The same hiccup can occur when the need to file bankruptcy arises in marriage or before a divorce. Filing bankruptcy can be done together or separately, and choosing which is best is dependent on the unique financial situation of the borrower. If the bulk of the debts are jointly held, filing together to eliminate them prior to a divorce can protect both parties from future liability. If the bulk of debts are individually owned, filing separate could be the best option. It is important to remember that division of debts and assets in a divorce decree doesn’t always protect a non-filing spouse after a discharge and they could still be sought after by creditors looking to collect or repossess in the future. Discuss your options for dissolving debt before a divorce with your Louisville bankruptcy lawyer.