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Florida Family Law - Online Article

What You Should Know about Divorce and Bankruptcy

By Lauren Brusca | Family Law Attorney

Reportedly half of all marriages in the United States end in divorce and the state of Florida has one of the highest divorce rates in the nation. Unfortunately financial problems are one of the leading causes of divorce and as a result we sadly see divorce and bankruptcy going hand in hand. We recommend Orlando couples who are contemplating divorce to focus on long-term strategies to protect their financial futures. In situations potentially involving both divorce and bankruptcy, the decision to file for bankruptcy may actually make financial sense.

At one time it was somewhat commonplace for couples in Orlando facing divorce to plan on filing for bankruptcy after divorce if they were unhappy with the outcome. Oftentimes debts associated with a divorce could be discharged in bankruptcy as long as they were non-support debts. However, with the 2005 changes to the Bankruptcy Code, it can now be much more difficult if not impossible to discharge any support or non-support debts incurred in a divorce.

11 U.S.C. § 523(a) provides that a debtor will not be discharged from any debts for support obligations to a spouse, former spouse or child incurred in a divorce or separation or in connection with a separation agreement, divorce decree, or other court order. For this reason, it may be more beneficial for those couples in a precarious financial situation to consider filing for bankruptcy prior to filing for divorce.

One of the advantages to filing for bankruptcy prior to filing for divorce is that it can make your divorce less complicated and ultimately save you money. Filing for a joint bankruptcy is less expensive but in Chapter 7, both parties must be eligible for filing and must qualify for the “Means Test.” If you are living together and your combined income is too high to qualify, it may be advantageous to separate before your bankruptcy filing.

In many cases couples contemplating divorce have often incurred large credit card and other debts, which must be dealt with in the divorce. Separating out these individual and joint debts can be difficult and frustrating, but it must be done. Couples may make agreements during the course of the divorce which are not binding on their creditors – if one party is ordered to pay such a joint debt as part of the divorce and he or she fails to do so, the lender can nevertheless come after both former spouses for the debt. Once bankruptcy is filed, however, all debt issues will be permanently resolved; the automatic stay will prevent creditors from taking action against you.

If you’re contemplating divorce and bankruptcy in Orlando, it is critical that you consult with a law firm that is highly skilled in both areas of law. Our knowledgeable and experienced staff will examine your individual situation to determine whether bankruptcy may impact your divorce in unexpected ways.

Contact our Orlando Divorce Attorneys

Contact The Roberts Family Law Firm today at (407) 426-6999 for a free consultation and to speak with an experienced Central Florida divorce attorney. It is imperative that the timing of your divorce or separation and any potential bankruptcy filing be considered to avoid additional problems in the future. We represent clients throughout Central Florida and have offices in Orlando and Kissimmee. Free parking is available.

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