Divorcing with debt: is bankruptcy the only option?
If you are already dealing with a significant debt load, you are probably well aware that it will only take some small issue or occurrence – a car accident or unexpected illness, for example – to push you over the edge into unmanageable debt. So what if the thing you are facing is a major life event that not only comes with its own emotional toll, but also has the potential to significantly worsen your financial situation?
Many of our Atlanta readers, when they are facing such a situation, probably tend to simply give up. They accept their financial circumstances, allow their debt to mount and their homes to go into foreclosure, and file for bankruptcy. For some people, that may be the right course of action. But it is important to recognize that, even when it doesn’t seem like the case, you are in control of your financial situation, and you have the power to make it better.
One such life event is divorce. Take, for example, the situation of a divorcing couple who has about $50,000 in unsecured (most likely credit card) debt. Both spouses are near or at retirement age and are unemployed. How can they split that debt without worrying that the other spouse will not pay their share and hurt their credit score in the process? Should they just file for Chapter 7 bankruptcy and eliminate the debt?
While other factors must be considered to determine whether bankruptcy is the right path for them, there are other options. For example, the spouses could make it a condition of the divorce that their debt be divided equally and transferred to individual accounts. That way, it is each spouse’s responsibility to make the payments, and the failure to do so will not harm their ex’s credit score.
The moral of this story is that you should consider all options before assuming that your financial situation is beyond repair. An experienced bankruptcy attorney can help you with that process.
Source: Fox Business, “Divorced and Unemployed: Time for Bankruptcy?” Steve Bucci, Oct. 18, 2012