The Facts About Filing Chapter 7 Bankruptcy Through a Divorce 1

Bankruptcy & Divorce - Chapter 7Going through a divorce is one of the most stressful and financially ruining things a person may experience in life. In some cases, one person in the marriage can have worked hard for years to amass property and wealth, only to lose half of it to someone who played no role in amassing the equity. To make matters worse, individuals can lose more than they are legally required to surrender by having to use their remaining property to pay creditors. Having a Chapter 7 Bankruptcy attorney will protect you and your assets, and help get you on your way to a clean start.

What is Chapter 7?

Also known as liquidation bankruptcy, Chapter 7 is often the easiest and quickest type of bankruptcy to go through. This form of bankruptcy is suitable for married couples, individuals and business partnerships. Here is how it works: a bankruptcy trustee takes all of your non-exempt property and converts it to cash for distribution to your creditors. However, most people don’t have assets to offer for cash value conversion to pay off creditors, so Chapter 7 Bankruptcy is a great option to offer a fresh start and a clean slate. This will leave you with no personal liability for debts when the completion of the filling is over. However, be aware that business partnerships can’t utilize the discharge—only individuals.

Is it the right choice for you?

By contacting a bankruptcy lawyer, you can get a better answer to this question. But before making that call you can always do some online research and get a good grasp of the question and a possible answer. In an article published by Forbes that examines bankruptcy and divorce the author reminds readers that if the “debtor’s” income is less than the sum to maintain his lifestyle, including debt services, opting for Chapter 7 is a great way to take advantage of whatever homestead and property exemptions the state allows, thus protecting the assets from creditors. If the existence of nonexempt property comes to play, the bankruptcy trustee would liquidate it to pay off the creditors (unsecured creditors included like ex spouses who lack collateral).

The author continues to say that while Chapter 7 is not a means to avoid a mortgage or shirk taxes secured by liens, it does provide a clean slate to the debtor and free their life from harassing consumer debt collectors.

What is involved in the process?

The first thing you need to do is provide all of your identification, such as your Social Security number, driver’s license, a copy of last year’s taxes and a detailed list of your living expenses. This includes clothing, food, utilities, medicine, transportation costs, etc. You also need a list of the creditors you owe money to with detailed dates and amounts. Once you provide your lawyer with these things and the filling has been made, an “automatic stay” will be granted that stops actions from being taken against you.

Moving forward

Although a Chapter 7 is fairly straightforward, having a good lawyer to oversee the process is of great importance to protecting you through the system. Do some research and find legal representation to help you on your way to a fresh start.

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Discussion

  • An experienced lawyer can guide you through the bankruptcy process and hopefully help you find ways to maintain some of your assets. Who knows – maybe shedding a little professional light on the situation before it got out of hand would have been enough to save this marriage!