If your circumstances are such that you need to address both bankruptcy and divorce, you are probably feeling a little overwhelmed by your situation. Neither process is easy, so it is tough to be forced into these two types of proceedings at the same time. Federal bankruptcy laws are complex and the New York divorce statute is extremely detailed. Plus, emotional issues are part of any New York divorce, which can further complicate the financial dire straits you face. Your best strategy to take on these matters is to retain an experienced Fulton County divorce lawyer to help guide you through the process. Some background information may also be useful.
- Filing Jointly Versus Separately: It may make sense to file a joint bankruptcy petition if both of your names are on the majority of your debts. The process is more efficient, and you pay one filing fee for the case. With a Chapter 7 liquidation bankruptcy, you can each move forward with a fresh start once your divorce is final.
- When to File: New York divorce laws are entirely separate from federal bankruptcy laws, but the two proceedings are interconnected. Timing and when to file each case will be a consideration. It may make sense to resolve all your debt through bankruptcy before you initiate divorce proceedings. You can your spouse can join efforts in paying one attorney and paying off your debts from a common fund.
- Bankruptcy in Property Division: In Chapter 7 bankruptcy, your trustee will collect your assets and sell them off to satisfy your debts. However, certain assets are exempt, which means you can keep them when the process concludes. In New York, married couples who file joint bankruptcy can double their exemptions. Each can protect the full amount for any property that belongs to both. This consideration alone may be a reason to file bankruptcy first, especially if you are on amicable terms.
- Not All Debts Can Be Resolved Through Bankruptcy: There are certain debts that you cannot discharge in bankruptcy, such as student loans, child support, and loans procured through fraud. You cannot escape your legal obligation for child support, regardless of when and how you file for bankruptcy or divorce.
- Qualifying for Chapter 7 Bankruptcy: Your income may be a factor in filing for bankruptcy in the context of divorce. Your joint income may put you over the limit for purposes of Chapter 7 bankruptcy. In such a situation, you may want to go through divorce proceedings first. As a single person, your income may put you below the threshold and you still qualify for Chapter 7.
Discuss Bankruptcy and Divorce with a New York Divorce Attorney
As you can see, divorce and bankruptcy are even more complex when you must face them at the same time. A lawyer with experience in both is a valuable asset in explaining your options and advising you on the pros and cons. For more information or to schedule a consultation with a member of our team, please contact Colwell Law Group, LLC at 518-864-0564 or visit us online.