Divorce can be very damaging for your personal finances. First of all, you will have to split what you own with your former spouse. In some cases, you may also have to pay spousal support, also known as alimony, or child support. Beyond that, you could incur thousands of dollars and expenses through both court costs and attorney fees.
For some people, the financial stress of divorce can be the tipping point for their personal budget. It may no longer be possible to continue making reasonable payments on the outstanding debts they owe while also meeting their obligations stemming from the divorce.
Bankruptcy can be an option for people struggling to meet all of their financial obligations. After all, if you’ve embraced a fresh start in your personal life, don’t you deserve a fresh financial start too?
Bankruptcy could help you get rid of unsecured debt
When the courts divide up your property and debts, they will try to be fair and reasonable. The person with greater earning potential may wind up with more of the debt, leading to struggles after divorce. It’s also possible that you found yourself living on credit cards after you moved out of your marital home and haven’t been able to get your finances under control since then.
Filing for bankruptcy will halt aggressive collection efforts and potentially lead to a discharge of your unsecured debts, which include credit card debt. It’s important to understand that attempting to discharge a debt that you originally signed for with your ex could lead to major complications.
The creditor could attempt to go after your ex for the full balance of the account, even if there is a court order stating that you need to repay the debt. This could cause a number of complications, including enforcement efforts due to your noncompliance with the divorce decree or your ex also needing to file bankruptcy because of the same debt.
Bankruptcy doesn’t forgive all of your debt
Bankruptcy can help you eliminate some of your unsecured debt so that you can better budget your income and meet all of your financial obligations moving forward. However, you generally can’t discharge certain divorce-related debts, such as past-due or future owed child support or alimony.
Getting rid of those credit card balances can mean that you have fewer bills to pay and can therefore meet your obligations more easily, but don’t expect bankruptcy itself to change how much support you have to pay.