Van Nuys Bankruptcy During Divorce Lawyer
Divorce is a life-changing event that can be emotionally and financially overwhelming. The divorce process can also become much more complex when bankruptcy is involved. Divorce does not only end a marriage, but it is also one of the leading causes of bankruptcy due to the fact that it can significantly disrupt the finances of the divorcing couple. Whether you are in the middle of a divorce or just starting to think about it, and you think you may have to file bankruptcy at the same time, it is important to obtain legal advice. Our Van Nuys bankruptcy during divorce lawyers can provide it.
How Divorce Affects Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy, the bankruptcy trustee has the discretion to sell your non-exempt assets to repay your creditors. If you file bankruptcy during divorce proceedings, the trustee must determine which property is part of the bankruptcy estate and whether certain types of assets can be sold to repay creditors.
If you and your spouse jointly own property, the trustee may sell all of the property if there is not an exemption for your interest in the estate. If the trustee determines that your spouse’s property is not included in your bankruptcy estate, they may pay your spouse their interest in the value from the sale proceedings.
If you want to file Chapter 7 bankruptcy, whether you file before or after divorce will depend on your income. If you file jointly, your bankruptcy case will be based on your joint income, which may be too high to qualify for this type of bankruptcy. This is true even if the individual incomes of you and your spouse are low enough to qualify separately. Due to this, people often find that they need to wait until their divorce case is finalized before filing bankruptcy.
How Divorce Affects Chapter 13 Bankruptcy
In a Chapter 13 bankruptcy, the trustee will not sell your property to repay your creditors. However, the number of non-exempt assets you own will impact the amount of money you will have to pay unsecured lenders through a repayment plan. This means that the trustee will need to determine the value of your interest in the property.
Repayment plans in Chapter 13 usually extend between three and five years. As such, you and your spouse will need to ask the bankruptcy court to consent to continue dividing your property during divorce.
Bankruptcy and Property Division in Divorce
Jointly discharging your debt can simplify the process of property division during divorce. Still, before you file jointly you must make sure the law will allow you sufficient exemptions to the marital property. Some states allow you to double the exemption amounts if you are filing jointly, but California does not. In most cases, it is usually recommended that you file bankruptcy after the property has been divided in divorce.
Our Bankruptcy During Divorce Lawyers in Van Nuys Can Help
Bankruptcy and divorce are two very complicated matters. At Wadhwani & Shanfeld, our Van Nuys bankruptcy divorce lawyers can make both easier for you by providing sound legal advice. Call us now at 818-658-2669 or chat with us online to schedule a consultation and to learn more about how we can help.
