Divorce and Bankruptcy Lawyers
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A divorce is always a stressful process, not only in your personal life but also in financial terms. Sharing the property, child support, and alimony are among a myriad of monetary responsibilities. If one spouse files for bankruptcy, then it is also important to understand all possible financial consequences.
If your family is on the verge of both divorce and bankruptcy and you’re not sure what the first step should be, we strongly recommend that you seek help from Leinart Law Firm. We will hear you out and suggest the best ways to make divorce and bankruptcy procedures as painless as possible.
Before you start with the divorce proceedings, you should contact an experienced divorce attorney who also specializes in bankruptcy. When couples are separating, a bankruptcy attorney can offer practical advice when it comes to joint debt and joint assets. For example, bankruptcy may be an option if there’s a lot of debt on a vehicle or a house that neither spouse wants to keep.
Helpful Information About Divorce & Bankruptcy
Financial Consequences of Divorce
Financial consequences of divorce can be as follows:
- Lost income
- Alimony payments
- Child support
- Retirement planning
- Childcare expenses
To make matters worse, divorce and bankruptcy often go hand in hand. If you and your spouse are in the middle of divorce and one of you files bankruptcy, this can pause the divorce proceedings for quite a long time.
Therefore, to end this as quickly as possible, we recommend that both of you jointly file for bankruptcy first and file for divorce second. Filing for divorce brings along several obstacles couples must go through and can negatively affect your credit score. With more than 15 years of bankruptcy law experience, Leinart Law Firm has the skills and expertise to guide you through these tedious procedures.
How Divorce Impacts Your Credit Score
For many couples, the toll that financial issues take on a relationship is too difficult to work through. You may hear a lot about how divorce can cause bad credit or how someone’s credit score tanked after a divorce. How does divorce impact a credit score exactly?
Divorce & Credit Scores
While the divorce process doesn’t directly impact your credit score, there are many financial obstacles couples go through during the divorce process that can indirectly drop your credit score. Some things that happen during a divorce that could lower your credit score include:
- Closing of credit accounts
- Using a higher percentage of your credit card to pay legal fees
- Co-signer of an account not paying their part
- Missed payments due to stress or misunderstandings
- Aside from these common situations, some spouses purposefully run up the credit card debt, knowing that it will be split during the divorce. The spouse may intend to harm the other person’s credit by doing so. Unfortunately, this ends up having a severe negative impact on both people’s credit.
Preventing Harm to Your Credit
The best way to prevent your credit score from taking a nosedive during your divorce is to try to maintain a mutual respect for your spouse. Talk openly about your finances and create a strategy on how to walk away from the relationship in a way that doesn’t harm either of your long-term credit scores. Consult with your attorney about how to protect your credit during your divorce.
Marital Debt After Divorce
Marital debt after divorce depends on the state where you live and time when the debt was acquired. Texas is a community property state; meaning that any asset or debt that you or your spouse acquired during your marriage is considered community property. Both of you have 50% community property interest.
If the debt was acquired during your marriage, you are both equally liable to repay it. However, some specific circumstances can change the amount of debt that you owe. You may also conclude an explicit agreement that assigns a certain amount of debt to each spouse.
If you would like to know how much debt you may be liable for, it is best to talk to your divorce attorney. They would be able to advise you depending on your case.
However, it is important to note that if your ex-spouse files for bankruptcy, you will still be liable for the entire debt from the creditor’s point of view. Even if the debt is discharged for your former spouse, you will still hold this liability.
When a divorce has finalized and your former spouse files bankruptcy, the creditors will look to you to repay any outstanding marital debt after divorce. However, filing for personal bankruptcy can help erase any debt that is carried over from a divorce.
At Leinart Law Firm, we have witnessed this happen, and our clients that were facing financial trouble before a former spouse declared bankruptcy often went bankrupt as well. Therefore, consulting an experienced divorce bankruptcy attorney and accessing bankruptcy resources would be the best option to discover advantageous solutions.
How to Erase Credit Card Debt After Divorce?
Going through a divorce is tough enough. Add in mountains of credit card debt and you may find yourself just wanting to stick your head in the sand. Thankfully, there are ways that you can help eliminate credit card debt after divorce. Texas is a community property state. That means all assets and debts acquired during marriage are generally split 50/50 after a divorce. Even if your spouse was the one going on shopping sprees, you could be on the hook for half. Of course, there are exceptions, but far too many people end up with extensive debt after divorce. Leinart Law Firm can help you erase your credit card debt after divorce.
You probably have heard of credit counseling before, but after a divorce may be the best time to seek assistance. As part of a bankruptcy you will work through a credit counseling course which can help you prioritize debts, create a budget, and learn to live within your means. Many people who are feeling hopeless about their credit card debt feel much better once they have a realistic strategy for paying their bills and on the road to being debt free.
Filing for Bankruptcy
Once your divorce is completed, you can file for bankruptcy to help eliminate credit card debt completely. Chapter 7 bankruptcy allows you to discharge all your debts and get a fresh start post-marriage. Bankruptcy isn’t for everyone and should be only considered with the help of an attorney who fully understands your case. There are very specific considerations you may want to consider before filing for divorce if you are thinking that bankruptcy may be an option for you. If you need answers to your questions, schedule a consultation with an experienced bankruptcy attorney.
Our Attorneys Can Help Relieve Your Debt
At Leinart Law Firm, we focus on bankruptcy and debt solutions, so we know exactly what legal protection you may be granted under Chapter 7 bankruptcy laws. With more than 15 years of experience with bankruptcy law, we have filed thousands of bankruptcies and helped many people to make a fresh start. Learn more about our other debt solutions: