Chapter 13 Bankruptcy, commonly called a wage earner's plan, enables individuals with regular income to develop a plan to repay all or part of their unsecured debts over three or five years. You can file a Chapter 13 Bankruptcy jointly with a spouse, or you can file it as an individual.
Understanding Divorce and Bankruptcy
The answer to the debtor's question depends on a couple of factors. In Chapter 13 bankruptcy, whether you file before the final divorce decree or after the final divorce decree is very important. The debtor does not say whether or not the bankruptcy has already been filed. If it is after the bankruptcy has been filed, an individual or couple has fewer options for implementing the plan, and a divorce decree could affect the ongoing payments of the plan.
The debtor also does not say whether the bankruptcy is being filed individually or jointly. If the bankruptcy has been filed before the divorce decree, a joint filing in a Chapter 13 plan could possibly stand a better chance of surviving the orders of the divorce court. If the filing has occurred by an individual spouse before the divorce decree, the complications presented by the divorce decree could frustrate completing the plan.
It is hard to complete a Chapter 13 Bankruptcy plan even as a married couple. Some 60% of Chapter 13 Bankruptcy cases are dismissed because clients fall behind on their payments. Ideally, the Chapter 13 Bankruptcy plan should be made after a divorce decree so that your discharged debts will not violate a court order of the divorce court.
When you file Chapter 13 bankruptcy after a divorce decree, you have to file as an individual. Only married individuals can file a Chapter 13 jointly. If you filed jointly before the divorce decree was final, you can complete the plan if you and your ex-spouse can agree on how to distribute the payments.
Divorce and Bankruptcy are two separate disciplines of the law, and when they occur simultaneously, each can tend to complicate the process of the other. That is why it is highly recommended you consult with both a bankruptcy and a divorce lawyer or a lawyer who specializes in both disciplines before you file for bankruptcy.
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