Bankruptcy can affect divorce settlements
Divorce can be a messy process even in the most amicable of splits, but when something as big as bankruptcy is introduced to the process, it can be even more confusing.
For any divorce proceedings into which a bankruptcy filing is introduced, it can be difficult for either party to know just how that affects the settlement, said a report from the Financial Times. A lot of the situation depends on how much the separating couple owned jointly. For example, if a house is in the name of both the husband and wife, then both parties are entitled to half of its value.
The report said that it's important to get a settlement done as quickly as possible. If the bankruptcy is finalized within six months of the settlement, then creditors can come to the non-bankrupt party and seek some of the payments. However, if that period has lapsed, then creditors have no claim to anything from the party receiving the settlement.
A recent report in the Orlando Sentinel said that a Harvard University study found that divorce was one of the leading causes for bankruptcy filings in America along with job loss and medical issues.
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