Experienced Lawyers will Provide Advice when Juggling Divorce and Bankruptcy in New Jersey
Filing for Divorce and Bankruptcy plus deciding which one comes first.
Divorce is the cause of financial ruin for many couples, and inversely economic issues are one of the leading causes for divorce. We mismanage our money as couples because we were taught not to talk about it. Should a couple consider divorce and filing for bankruptcy in New Jersey, what should they do first? Unfortunately, there isn’t a cut-and-dried answer. Every situation is different and cannot be determined without analyzing the factors and conditions of the divorce and the bankruptcy. The optimal way to do this is by hiring a skilled bankruptcy and divorce attorney promptly.
Pros and Cons If I File For Divorce Before Bankruptcy in New Jersey
First, it is essential to determine what kind of bankruptcy you are filing for. Chapter 7 clears out your debts with the court’s approval. This process usually takes a few months. Chapter 13 is a reorganization of your debts, and you repay them using a payment plan. Some of the obligations may eventually be discharged.
Filing for divorce before bankruptcy may be more straightforward because the property and the debts will have been equally distributed in the divorce. The heavy lifting has been done. Also, if you are listing your income alone, there is a better chance you will qualify for Chapter 7 in terms of revenue. Your payments will be measured individually, increasing your opportunities to be under the income limit for filing for bankruptcy. Also, If you and your ex do not work together well, this is ideal as you won’t have to work with one another on the bankruptcy case.
Now the bad news is that filing for bankruptcy after your divorce means you have to pay your filing fee and attorney instead of sharing the expenses with your ex-spouse. Also, if your ex-spouse was ordered to pay a joint debt, like a medical bill during the equitable distribution of the divorce, but it was discharged in the bankruptcy, the creditor can still go after you to collect on it. You cannot go to family court to uphold the order that your ex pays the debt because the discharge from the bankruptcy trumps family court.
What If I File For Bankruptcy Before Divorce in NJ?
Most of the time, people choose to file for Ch.7 bankruptcy because it takes three to four months rather than three to five years. Also, Ch.13 involves a certain amount of repayment on the debtor’s part through a payment plan, while Ch.7 removes any qualifying debt. You are filing for bankruptcy before your divorce can delay the distribution of assets. You will be assigned a bankruptcy trustee to keep your assets in a bankruptcy estate. Those items will be sold, and your debtors will distribute the money.
The benefits to filing for bankruptcy before divorce is that you can get rid of debts and get out of contracts like a car loan or your mortgage (if your house is underwater, it has no equity). You and your spouse can use the same lawyer and file together. When filing jointly, your combined income must be below the “means test.” This is an analysis of your average monthly payment for six months before filing against the median income in your state. If you are in a one-income household, filing before your divorce will help you pass the means test because both of you have debt, but only one of you is earning a salary. Relieving some debts will make it easier for the wage earner to pay alimony in the future.
Advantages of Filing Together in NJ Courts
There are some advantages to filing together. The first is that you can double the exemptions in your bankruptcy profile. An exemption is an asset not placed in the bankruptcy estate, so it will not be sold to pay the creditors. This is an excellent way to keep more help than filing individually. Filing a joint petition will reduce the number of assets and debts distributed in the divorce proceedings. Moreover, the legal costs are lower when filing together and using the same lawyer. Also, couples who file together profess to a more organized divorce process when filing before their divorce.
Bankruptcy and Child Support in New Jersey
Bankruptcy does not discharge child support. It is impossible to include child support in the debt discharged by bankruptcy. There are times when a parent’s economic problems cause them to make late or partial payments, but they can file a motion to modify support until the situation improves. Medical bills or other debts incurred from a child’s care cannot be discharged either.
Why Is It Important To Include Credit Debt In Your Bankruptcy?
There are a few reasons you should include credit debt in your bankruptcy. First, credit cards are unsecured debt, Which means that whatever you purchase does not have to be returned, and your debt is not guaranteed against your house, car, or another asset. Second, if you and your spouse are preparing to divorce and the credit card debt is discharged for your spouse, the credit card company can go after you. It is essential to include that you must not make any luxury purchases or go on shopping sprees from six months of considering bankruptcy because, in all likelihood, that debt will not be discharged.
Advantage of Filing For Bankruptcy Before Divorce When it Comes to Joint Accounts
A joint filing can be challenging because it demands cooperation between spouses. The good news is it gets the debts and assets organized, making the distribution part of the divorce simpler and smoother. Legal fees and the time necessary to agree on everything are lessened because many of the decisions have already been made when it comes time for the divorce.
Navigate Through the Variety of Options and the Specifics of Your Divorce Case with Help from the Lawyers at Bronzino Law Firm in Brick & Sea Girt, NJ
Many are the pros and cons of filing for bankruptcy before or after your divorce. The only person who can advise you on your decision is an excellent lawyer. Each case is different, and your needs should be taken into account. It is scary to file for bankruptcy. What if you are refused? What if not enough debt is discharged? How long will my divorce take? There are so many questions.
At Bronzino Law Firm, LLC, we have many of the answers you need to move forward with your divorce and bankruptcy. Our goal is to stand beside you during the entire process and provide the representation you deserve as we analyze every angle and possible results.
The one mistake you don’t want to make is waiting too long. The sooner we can help you, the better. You can contact us from Freehold, Rumson, Red Bank, Manchester, Toms River, Middletown, Berkeley, and throughout Ocean and Monmouth County for additional assistance. Call us for your free confidential consultation at (732) 812-3102 or fill out here our convenient form.