Filing Bankruptcy After Legal Separation

For those who are legally separated, filing bankruptcy is no different than filing it when married or single. During the legal separation, the individuals work together or the court makes decisions regarding the separation of assets as well as debts. After the legal separation, each individual should know what debts and assets he or she is responsible for. This makes filing for bankruptcy a process of liquidating assets to repay debts.

Legal Separation and Bankruptcy

During a legal separation, the court determines who is responsible for which types of assets and debts. It is not uncommon for individuals to leave a marriage with a significant amount of debt to repay. Whenever possible, assets owned by both in a marriage are sold to repay any debts possible. However, both parties may walk away with a significant amount of debt. Filing bankruptcy, then, may be necessary to get a fresh start.

There are several aspects of filing bankruptcy to keep in mind.

When a spouse paying spousal or child support files bankruptcy, there may be a temporary halt to payments for these needs. However, child support and spousal support are not dischargeable debts. These will continue after the bankruptcy.

In bankruptcy, assets not protected under bankruptcy exemptions are often sold. The proceeds from the sale are used to repay creditors.

The court ruling on the legal separation is taken into consideration. Lenders may not come after individuals who no longer are legally responsible for a debt, if a court ruled the debt belongs to one party in the legal separation.

In situations where a spouse files for bankruptcy who is required to pay spousal or child support, the other spouse has the right to file a petition as a creditor against that individual . Doing so establishes the spouse’s right to receive support from the individual filing bankruptcy. The courts will not discharge spousal or child support but it may be necessary to file a claim for it during the bankruptcy process. This is an important aspect to consider since it is up to the spouse receiving the support to know what is occurring and to protect his or her interests.

Hiring an Attorney

It is critical for anyone dealing with divorce, legal separation or bankruptcy to use an attorney to help represent them. The attorney will ensure that the process goes smoothly and the interests of the individual are kept at the forefront of the bankruptcy filing. If your spouse has filed bankruptcy, or you need to do so, work with an attorney throughout the process.

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