People will hold off on filing for bankruptcy for several reasons, especially if they are in the midst of a pending divorce case. The fear is that a bankruptcy case will affect the ability of the parties in a divorce case to divide their property. While a bankruptcy case will not affect a family law court’s ability to handle child custody and child support matters, the bankruptcy will prevent the court from finalizing a division of marital property.
Tag: Divorce
A Divorce May Not Free You from your Ex-Spouse’s Student Loan Debt
Most people assume that when they get a divorce, they will walk away free and clear from their spouse’s student loan debt. After all, it was the spouse who incurred the debt, so why should the other spouse be on the hook for this debt? Unfortunately, a divorce decree may not be enough to free someone from their ex-spouse’s student loan debt.
One reason a person might find themself responsible for their ex-spouse’s student loan debt has to do with joint consolidation. This federal program was short-lived, but many people took advantage of it while it was available. In fact, nearly 14,000 student loan borrowers participated in the joint consolidation program, which Congress ended in 2006. Joint consolidation allowed married couples to take their separate student loan debts and combine them into one monthly payment with a lower interest rate. However, once these debts are combined, it can be difficult to separate them in the event of a divorce.
Recent Study Reveals the Burden Debt Has on Mental Health
Carrying any amount of debt can be stressful, but carrying substantial amounts of debt can be debilitating to a consumer’s emotional well-being. Debt can cause anxiety and depression, and the longer a person carries it, the more likely he or she will feel physical and emotional effects from it. A recent study highlighted just how severe the effects of insurmountable debt can be.
The data reviewed comes from the 2021 BC Consumer Debt Study released by BC Licensed Insolvency Trustees Sands & Associates. They surveyed over 1,700 consumers throughout British Columbia who declared personal bankruptcy or legally consolidated a debt.
The survey noted two specific trends regarding consumer debt. The largest proportion, approximately 32 percent, of people who responded to the survey said that they had had $25,000 to $49,999 of debt, not including mortgages or car loans.
Four out of five surveyed said they found that the main causes of their debt were completely outside of their control. For example, 18 percent reported that their debt grew to the amount it was due to them needing to rely on credit to pay for essential costs of living that their income could not cover. Additionally, others reported that their debt was caused by other issues outside of their control, such as illness or health-related problems, the breakdown of a marriage or relationship, and job-related issues.
Of the consumers surveyed, more than 56 percent of them said that credit card debt was their largest source of debt before they entered formal proceedings to eliminate their debts. Payday loans were the main source of debt for approximately six percent of those polled.
Individuals surveyed reported that being in such deep debt negatively affected their well-being. In terms of emotional well-being, 77 percent said their mental health suffered. Four out of five individuals said they constantly worried about being in debt. Three in four surveyed said debt caused them anxiety.
Even more concerning, one in six individuals surveyed said that the stress of carrying large amounts of debt resulted in them contemplating or thinking of suicide.
Mental health was not the only thing affected by debt. Fifty-three percent said that their physical health likewise suffered.
One major issue occurs when the consumer is not truly aware of how much he or she actually owes, resulting in the individual’s finances spiraling out of control. The stress that results from this debt can be debilitating to the person’s mental well-being. Approximately 68 percent reported that they concluded that debt was a major problem when it became a source of major stress in their lives. Sixty percent (60%) said they realized debt was a problem when they could only make minimum payments, while fifty percent (50%) said they realized debt was a major problem when their balances never went down from month to month. Unfortunately, at that point, their debt had grown to a figure that they could not control, forcing them into either bankruptcy or other sources of debt relief.
For more information, the full study can be accessed here.
If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
Divorce Court Cannot Decide on Bankruptcy Obligations
A Superior Court judge in Georgia could not order that a divorce settlement be wiped out in bankruptcy, a federal bankruptcy judge has ruled. Even though the divorce decree provided that “the property division payments to the Plaintiff shall not be dischargeable in bankruptcy,” Judge W. Homer Drake of the Northern District of Georgia makes it clear that the Georgia court lacked jurisdiction to decide the effect of bankruptcy on the divorce.
There are certain kinds of debts that are non-dischargeable in bankruptcy. However, these bankruptcy exceptions include support obligations arising from divorce, but do not include property settlements distinct from support.
The divorce decree included provisions that the defendant would pay his ex-wife $1,300 a month for child support and $53,000 “as part of the property division,” the court said. But the decree also said that “the property division payments to the plaintiff shall not be dischargeable in bankruptcy,” it said.
The bankruptcy court rejected the Georgia court’s decree that the obligation would not be dischargeable because it violated public policy. In addition, it found that the state court lacked jurisdiction to make that call.
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If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
When Shared Bills Outlast Your Relationship
Between 1993 and 2005, married couples were legally allowed to consolidate their student loan debts. In 2005 the federal government stopped allowing joint consolidation loans, however, thousands of couples who have since gone through divorce have been stuck with their former spouses’ student loan debts.
The Boston Globe reported an instance where a woman consolidated her student loans with her husband’s in order to get a lower interest rate. At the time, she owed approximately $4,000 and he owed $19,000. When the couple divorced four years later, the woman was stuck with the entire joint debt that had reached over $30,000. After fighting it in court, she was told it could not be split and since her former husband did not have a job at the time, she was ultimately responsible. As a result, she lost her home to foreclosure, declared bankruptcy and had her paycheck and tax returns garnished.
Unfortunately, this is not uncommon for couples who consolidated debt during their marriage and later divorced. The U.S. Department of Education says federal law does not allow the old loans to be split, even in cases involving domestic violence. Joint borrowers also cannot apply for income-based repayment plans unless both parties submit financial information.
Borrowers facing “unique circumstances, such as domestic violence,” are encouraged to contact the Federal Student Aid Ombudsman to explore options.
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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Bankruptcy or Divorce: Which should you file first?
Filing for bankruptcy can be further complicated when the parties involved are in the middle of a divorce or considering divorce. Clients in this situation wonder whether they should file for divorce or bankruptcy, first. Unfortunately, there is not a clear-cut answer, as every divorce and every bankruptcy filing is unique. However, there are a variety of factors one should consider when making this decision.
Income of the parties. If one party has significantly more debt, and the other party makes a substantial income, it will be difficult to file a joint Chapter 7 bankruptcy. This is due to the fact the court will have to consider the total household income when determining whether or not to grant the bankruptcy petition. In this case, it is likely more beneficial to file for divorce before filing bankruptcy so the household income is not considered in bankruptcy.
Both parties must agree to file bankruptcy. Filing a joint bankruptcy requires both parties consent to the filing. One spouse cannot force the other to file, even during a divorce proceeding. The party who wants to file for bankruptcy may be eligible to do so individually, but filing individually will not discharge the other spouse’s debt. Therefore, in this case it may be advisable to file for bankruptcy before the divorce so both parties’ debt can be discharged before the divorce proceedings begin.
How has the debt been distributed? In certain instances, one of the parties may have substantial property and assets, separate from the spouse, possibly received through a gift or inheritance or acquired before the marriage. In this situation, the party wanting to file bankruptcy should do so individually, since the spouse’s assets (if filed jointly) could prevent a bankruptcy discharge.
Property of the estate during a divorce. After a bankruptcy petition is filed, all of the debtor’s property becomes the property of the bankruptcy estate. This means the property cannot be divided in a property settlement agreement during a divorce unless permission is received from the bankruptcy judge or if the bankruptcy is over. This can delay a divorce proceeding significantly.
Considering the variety of factors involved , it is very important that anyone with questions about bankruptcy who is also going through a divorce be able to provide complete and accurate information about their assets and liabilities, so your attorney can best assess your situation.
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If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Divorce often tied to Bankruptcy
A recent study from the Minnesota Population Center at the University of Minnesota revealed that the age-standardized divorce rate has grown by 40 percent since 1980. The age-standardized divorce rate is an important factor in calculating divorce risk, because the U.S. had a younger population in 1980 and statistically younger couples are at a higher risk of divorce. The study also revealed that since 1990, the divorce rate for those ages 60 to 65 has tripled.
Divorce can be costly for a variety of reasons and is a common cause of many bankruptcy filings. Considering the court costs, attorney fees and similar expenses, the divorce process can cause financial hardship. Not to mention splitting into two households, the financial strain of alimony or child support payments and the loss of certain economic benefits associated with marriage.
Depending on your unique circumstance, bankruptcy may be better to file before or after divorce. In some instances it can be advantageous to file for bankruptcy before divorce. Eliminating your debts can simplify the divorce settlement process. On the other hand, filing a joint bankruptcy can save on court costs and legal fees. Incomes generally decrease after a divorce so while you may not qualify for bankruptcy prior to divorce, you may qualify for it afterwards.
The best way to determine if and when bankruptcy is the right option for you before a divorce is to speak with an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Related Resources: http://www.digitaljournal.com/pr/1826759
January the Most Popular Month for Divorce
The first month of the New Year is reportedly the most popular time of the year to file for divorce. Below are five financial reasons why:
1. Year-End Bonuses are a contributing factor of why many couples wait until January to divorce. In most states, once a divorce has been filed, any income that comes in after, is separate. Year-end bonuses are commonly fought over in divorces.
2. Cooling Off can be another factor in why spouses wait until January to file for divorce. Spouses are aware of the fact that their significant other might be less likely to settle if their holiday was ruined.
3. Holiday Shopping can be disastrous if spouses are angry at one other. The spouse that has been served the papers may go on a spree with the idea that he/she deserves it while the opportunity is present.
4. Tax Returns are commonly thought to be a contributing factor to whether a divorce is filed in December or January. While it really makes no difference when the divorce is filed, many couples are under the assumption its best to start the New Year with a clean slate.
5. More Time to Plan is available if a spouse waits to file for divorce in January. Both spouses have most likely had some time off for the holidays and are able to get end-of-year statements together. There is more time for spouses to sift through finances and gain a better prospective on what the future holds.
To read more on this story visit: http://www.nbcnews.com/business/considering-divorce-wait-until-january-1C7659310
If you are in a financial crisis and are considering filing bankruptcy, contact an experienced attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia, P.A. at www.miamibankruptcy.com.
Can Bankruptcy Eliminate Some of my Divorce Debt?
Many people who have gone through a divorce find themselves left with unmanageable debt. Bills that you once easily paid can be impossible for you to afford with only one income. An added stress is that you may also be required to pay alimony or child support. ‘Support’ payments can take a large amount of your monthly income. Unfortunately, these debts are not typically eliminated through any type of bankruptcy. However, if you are struggling to keep up with your other bills, bankruptcy may be the best option to help you get a handle on your other finances.
According to Section 523(a) of the Bankruptcy Code the following debts are non-dischargeable through bankruptcy:
• Certain types of taxes and particularly taxes where the debtor filed a fraudulent return.
• Debts which the debtor did not list in his/her bankruptcy papers
• Debts for a domestic support obligation arising from a divorce or other family law situation
• Property settlements arising from a divorce or other family law situation
• Most fines and penalties payable to a government unit
• Student loan debt
• Personal injury claims arising from the use of drugs or alcohol
• Criminal restitution
• Condominium or homeowner association assessments due after the debtor files for bankruptcy
Oftentimes debt that is shared between spouses will still be shared debt after a divorce. As a result, if one spouse files for bankruptcy, the creditors will expect the other spouse to fulfill the debt that was once shared. This can send the other spouse into bankruptcy as well. For this reason, couples are urged to file for bankruptcy before filing for divorce, in order to divide assets properly.
To read more on this topic visit: http://www.alllaw.com/articles/family/divorce/article62.asp
Or visit: http://bankruptcy.lawyers.com/consumer-bankruptcy/Personal-Bankruptcy-and-Divorce.html
If you are in a financial crisis and are considering filing bankruptcy, contact an experienced attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia, P.A. at www.miamibankruptcy.com.