A divorce can be complicated enough without other legal processes interfering. That’s why it can be tough to deal with a spouse who files for bankruptcy during your divorce. This can cause a variety of issues and is sure to delay the settlement of your divorce. Our Morris County, NJ division of assets attorneys can tell you more about what you should expect.
Can a Bankruptcy Affect Divorce Proceedings?
It can. One spouse filing for bankruptcy will basically put your divorce on pause. You and your spouse need to divide up your assets and debts in a divorce. Someone filing for bankruptcy completely upends those negotiations. One person has the protections that come with bankruptcy, the other doesn’t. One person may have to have assets liquidated. It’s impossible to figure out who should get what once someone has filed.
How Does Bankruptcy Work If My Spouse and I Both Owe a Debt?
This could also end up sticking you with the sole responsibility for debts that you and your spouse took out together. Let’s say you both signed onto a car loan. Your spouse files for bankruptcy and gets a fresh financial start, but what about you? Now you’re the only one on that car loan. You probably don’t need too many guesses to figure out who the creditor is going to come after next.
What Happens to Property That I Own?
Your separate property should not be a part of your spouse’s bankruptcy. That means that anything you owned before your marriage or any gifts that you were the only recipient of during your marriage should be fine. That is, unless you made the mistake of “commingling” these assets with your marital property.
Let’s say you inherited some money from a loved one. If you kept that money separate from your marital assets, then you should be fine. However, if you deposited this money in your joint account, that can cause problems.
Is Filing For Joint Bankruptcy a Better Option?
It’s rare that one spouse filing for bankruptcy during a divorce is the best option. This action is just far more likely to cause problems. If finances are a problem, you and your spouse would be better off filing jointly. You can do this before you divorce and simplify matters.
You can also decide to wait until after your divorce is completed. Then one or both of you can file separately without worrying how it will affect the other person.
Talk to a Divorce Attorney
If your spouse is trying to initiate the bankruptcy process during your divorce, you need to talk to an attorney. Contact Townsend, Tomaio & Newmark, L.L.C. to schedule a consultation with our team. We can tell you more about the potential consequences of this filing and how you can make moves to protect your assets.
