Divorce & Bankruptcy
Divorce and bankruptcy are separate, distinct legal actions. As a matter of law, these legal areas couldn’t be much further apart. The federal government is in charge of bankruptcy law; states are responsible for family law. Bankruptcy courts handle creditor rights; state courts dissolve marriages. Yet despite these legal realities, the fact of the matter is that bankruptcy and divorce often result from the same basic reality: financial trouble.
Divorce typically separates the assets and liabilities of a marriage, assigning each resource and debt to each partner. When this approach works, both former spouses pay off their portion of the debt. However, for a tragically large number of couples, this approach fails. One or both partners struggle to make ends meet and, as a result, he or she defaults on the debt. When this occurs, a creditor may pursue its remedies against both members of the former marriage, regardless of the agreement in the divorce decree.
In an effort to protect against this possibility, many former husbands or wives may seek bankruptcy protection. A Chapter 7 or Chapter 13 personal bankruptcy allows for a former spouse to get a clean financial slate in bankruptcy court, just as they are getting a clean marital slate through family court. The process isn’t necessarily easy, but in the long run the results can be rewarding.
Are you concerned that personal bankruptcy may be a necessary option as you move forward after your divorce? The attorneys and professionals at the Dallas law firm of Fears Nachawati can help you answer your questions. To find out the answers to your questions, talk to us today.