Divorce and Bankruptcy

Bankruptcy is a complex area of Federal Law that is all about giving people a fresh start. For instance, if your monthly payments on your debt exceed the amount of money you are bringing home, it may or may not be a good idea to declare Bankruptcy. To understand how marriage and Bankruptcy interact, you must first understand the basics of Bankruptcy.

     There are a number of different types of Bankruptcy filings available to debtors; Chapter 7, Chapter 11, and Chapter 13. These forms of Bankruptcy can be further split into two types; reorganization and immediate forgiveness. Chapter 11 and Chapter 13 are forms of the reorganization type. In this type of Bankruptcy, debtors must continue to make payments to a "Trustee" who is appointed to mange their finances. These plans may take between three and five years to finish. Chapter 7 is a type of Bankruptcy that allows you to discharge your responsibility for debt much faster.

     Chapter 7 sounds like the easiest of the three options, but there are some very strict guidelines for determining whether you qualify. The Bankruptcy courts utilize a "means test", which examines information such as your income level, the median income for where you live, and your debts. If you are below a certain threshold, you are allowed to file for Chapter 7.

     Whichever type of Bankruptcy you qualify for, your debts may be "discharged" at the end of the process. This does not mean that the debt completely goes away. It merely means that the creditor cannot attach to your personal bank accounts, wages, or personal property anymore. If the creditor is a "secured creditor", such as a mortgage holder, they may still have the option of foreclosing on the secured property, such as your house.

    Given all these types of Bankruptcy plans, it is important to work with an attorney who is specially licensed to handle cases before your local Bankruptcy courts. If your debts are getting to be too much, seek out a local Bankruptcy attorney to discuss your options. The attorney will need to examine what kinds of debts you have to determine if Bankruptcy is right for you.