Going through a divorce can be incredibly challenging, which is why discovering that your spouse has filed for bankruptcy can leave you even more overwhelmed. Unfortunately, despite the fact that it’s your spouse who has initiated this process, it can have a significant impact on your life. As such, understanding how bankruptcy works and how it can influence your divorce is critical. The most important thing you can do during this process, however, is to connect with Somerset County property distribution attorneys who can assist you.
How Does Bankruptcy Work?
When someone files for bankruptcy, it’s important to understand what this process entails. Generally, you’ll find that this process goes one of two ways – Chapter 7 or Chapter 13. Chapter 7 is a liquidation process that requires the filer to pass a means test. This essentially compares their income to that of the annual income of others in the state. If they are less than the average, they can pursue this option, in which your bankruptcy trustee will liquidate your assets to pay off creditors. Chapter 13, on the other hand, requires you to start a repayment plan to pay your creditors back over a three to five-year period.
How Can It Affect Our Divorce?
When your spouse begins the bankruptcy process, it’s important to understand that this can unfortunately have an impact on the outcome of your divorce. Though it won’t impact child custody, it can drastically affect how your assets are divided.
In general, all marital assets will become a part of your spouse’s bankruptcy estate when they file. When your spouse files, they will receive an automatic stay, meaning their creditors cannot contact them regarding their debts. However, you’ll find that this automatic stay will also impact how your divorce will proceed. This stay will prevent property division.
Typically, until your spouse’s bankruptcy trustee determines what assets are part of their estate you cannot proceed with this process. Once the bankruptcy case is complete, the remaining assets will be divided according to the state’s equitable distribution standard.
Will I Need to Wait Five Years for a Divorce?
If you are going through a divorce, and your spouse wants to file for Chapter 13, it’s important to understand that you may not have to wait for their repayment plan to finalize before you can continue. Generally, your attorney can help petition the bankruptcy court to lift the automatic stay for your divorce so you can proceed with the process.
As you can see, it’s imperative to understand that this process is incredibly difficult and complicated to navigate. As such, it’s in your best interest to work with an experienced attorney from the Siragusa Law Firm to help you traverse these complicated and emotional times. Our team will do everything possible help you fight for the best possible outcome. Connect with us today to learn how we can assist you with any issues you may experience.
