Divorce-Related Bankruptcy

Debt and financial problems are a leading factor in many Georgia divorces. In some cases, a couple's debts are so severe they may need to file for bankruptcy protection either before or after seeking a divorce. Given the complex interaction between divorce and bankruptcy laws, it is important to work with a qualified Atlanta divorce lawyer who can help you through the process.

At Stadler Law Group, LLC, we have experience assisting clients not only with resolving divorce issues, but also in addressing the financial aftermath. Just because you and your spouse separate, that does not eliminate the debts that you incurred during the marriage. Your creditors still expect to be paid, and if you are unable to do so, bankruptcy may be your only option.

Bankruptcy Before Divorce

It often makes sense for couples to seek bankruptcy protection before filing for divorce. By filing for bankruptcy before divorce, couples may be able to eliminate much of their unsecured debt, such as credit card bills, before dividing what remains of their property. In addition, married couples can double the amount of property that is exempt from the bankruptcy process.

In Georgia, debtors must use a list of bankruptcy exemptions provided by state law. For example, Georgia allows a homestead exemption of $21,500 per person. This exemption covers the debtor's equity in any real or personal property used as a residence. So if a married couple jointly owns their home, they can protect up to $43,000 in equity – the market value of the property less any mortgages – from their creditors.

Bankruptcy After Divorce

Divorce often represents a significant financial shock. Many former spouses find they cannot sustain the costs of running separate households while still paying down marital debts. Add to this the cost of paying for the divorce settlement itself, including spousal and child support, and many individuals find they have no choice but to file for bankruptcy.

It is important to understand that while state law specifies what property you can protect in bankruptcy, federal law dictates what debts cannot be discharged. First and foremost, you cannot use bankruptcy to get out of a domestic support obligation or to discharge any debt to a former spouse incurred in the course of a divorce or separation. However, you may be able to discharge some unsecured marital debts that were allocated to you as part of a divorce settlement.

This is a complicated area of law. Bankruptcy is a difficult process even under normal circumstances. And divorce is far from normal.

At a time when you are emotionally fragile from dealing with the end of your marriage, you may not want to think about handling your mounting debts. But these problems do not go away on their own. You need to work with an Atlanta divorce lawyer who will look out for your interests and help you resolve your marital and financial problems. Contact Stadler Law Group, LLC, if you would like to discuss your situation with an attorney today.