Montgomery County Divorce Bankruptcy Lawyers
Divorce & Filing Bankruptcy in Pennsylvania
When going through financial difficulties, the toll it takes on relationships, particularly marital ones, can be severe. Oftentimes it places stress on an already strained marriage, and can lead many couples to decide they should seek a divorce. While beginning the divorce process in Pennsylvania, the financial toll can be so taxing that an individual may determine they should either personally or jointly with their soon-to-be ex-spouse file for bankruptcy, which further complicates matters.
What Happens if I File for Bankruptcy During a Divorce in Pennsylvania?
If you decide to file for personal bankruptcy, federal bankruptcy court has priority over the state or county court that is handling your Pennsylvania divorce case, which means that the divorce court can't distribute any more marital assets until the assets are released by the bankruptcy court. Your divorce case will essentially be put on hold until bankruptcy proceedings are completed. If you have been ordered to pay spousal support or alimony to your future ex-spouse, continue to do so, as they can't be discharged in bankruptcy.
If you and your soon-to-be ex-spouse have joint credit, you may want to consider filing for bankruptcy with them. If you file for personal bankruptcy, the banks will immediately go after your spouse for funds that are owed, which will likely force them into bankruptcy as well. Filing for bankruptcy together may be a good option in certain scenarios.
Filing for Pennsylvania bankruptcy can make the divorce process much simpler, as it gets rid of many assets and all debts. After the bankruptcy is completed, the only thing the divorce court can divide between you and your future ex-spouse is what remains, such as 401Ks, IRAs, and the like.
What Happens if We Filed for Bankruptcy Before Filing for Divorce?
However, if you and your soon-to-be ex-spouse filed for Chapter 13 bankruptcy before filing for divorce in Pennsylvania, it may affect whether you are able to fulfill the repayment plan ordered by the court, particularly if alimony payments and/or child support will need to be established. First, with your future ex-spouse, you should try to establish a divorce settlement agreement, acknowledging the bankruptcy repayment plan. The agreement should also discuss how the monthly payment plan is going to be divided between both parties. If an agreement is unable to be made, the matter will need to go to bankruptcy court, and any decisions made between you and your soon-to-be ex-spouse may be rejected by the court. The bankruptcy payment plan will need to be reevaluated by the court as there are now separate households.
How are Bankruptcy Payments Made When Divorce is Involved?
When you file for bankruptcy in Pennsylvania, an impartial trustee is assigned to your case. They are responsible for receiving monthly payments from you and your future ex-spouse and distributing them to any creditors that are owed in agreement with the repayment plan. The trustee will also review the divorce settlement agreement proposed by you and your soon-to-be ex-spouse as well as both of your incomes before determining whether the settlement is acceptable and in accordance with the bankruptcy process. Generally payments to the trustee will need to be made for three to five years. If you filed for bankruptcy before filing for divorce, before hiring a Montgomery County PA divorce bankruptcy lawyer, you will need approval from the trustee.
All situations regarding bankruptcy during divorce are different, and depending on your specific financial situation, you and/or your future ex-spouse may qualify to file for Chapter 7 bankruptcy once the divorce is completed. The trustee may suggest this after reviewing your personal finances. Under certain circumstances the creditors and the trustee will agree to continue accepting payments through the Chapter 13 payment plan once a divorce is finalized. In this scenario, each party is responsible to pay a portion of the monthly payment.
PA Divorce Bankruptcy Attorneys Securing Your Future Finances
As you can see, involving bankruptcy in the divorce process can make an already complex situation even more complicated. Every case is different, and that's why it's important to have a skilled Montgomery County PA divorce attorney working on your behalf to ensure your rights are protected. At the Law Offices of Sheryl R. Rentz, our lawyers will handle your case with the utmost respect and professionalism and can answer any questions you may have regarding bankruptcy during a divorce. Call our office today at (866) 290-9292 for a free consultation. We're here to help you during this difficult time in your life.