The global pandemic has been financially devastating to couples, causing many to put off their divorce in favor of waiting for the world to recover. The rise of mandatory shelter in place orders combined with layoffs, job closures, and reduced work hours have left many people in financial distress. The stresses of living together during a pandemic coupled with distressed finances can strain already weakened relationships to the breaking point.
There is a common feeling among financially vulnerable couples that even if their marriage is a problem, they can’t afford to get divorced. Many couples fear the idea of going back to being solely responsible for living expenses and accumulated debt. Depending on how long a couple has been married, it can take as many as 15 years to regain your financial stability on your own after divorce-related financial distress. Even if you don’t file for bankruptcy, it can still be difficult to regain the assets and wealth accumulated throughout a marriage.
If you decide divorce is the only way to manage the debt left over after the divorce is to file for bankruptcy, you will be left with it on your record for seven years. Many financial disclosures will ask you whether you’ve filed for bankruptcy in the last decade, and it can harm your ability to move on financially. Not every couple who ends up bankrupt after their divorce has been married for many years. The debts accumulated during the marriage and the ability to pay them off and any court orders, like child support or alimony, can determine each party’s financial health.
Bankruptcy and divorce go hand and hand for many married couples. Because financial problems are a leading cause of divorce, many of the couples who choose to separate are already in a precarious financial position. The division of assets and debts, forming new households, and paying for expenses once covered by two incomes is enough to send most struggling couples into bankruptcy. If couples have substantial debt together, they’ll have massive debts apart. When couples ask, can divorce cause bankruptcy, the answer is it depends on your current financial situation.
Once your assets and debts are distributed, your agreement may assign those debts to you or your spouse, but creditors are not obligated to acknowledge your settlement. Meaning that if your spouse is on the hook for half of the credit card debt and files for bankruptcy, the creditors may look to you to pay the sum total of the debt that was once shared. Post-divorce bankruptcy by one partner can lead to the other’s bankruptcy, which is why many couples petition for bankruptcy together before the divorce.
At Creative Family Solutions, we can help you and your spouse work together to formulate a strategy for your property division and bankruptcy case. If you’re unsure which route to take or the best strategy for your situation, our attorneys are available for a consultation. We provide attorneys who can review the details of your case.
Call us today at (916) 797-1575 to schedule a consultation.
Fields marked with an * are required