What does a botched divorce look like, exactly?

Most commonly, you see the caretaking parent revoking rights to many assets that would otherwise be awarded to them in exchange for keeping their home and children. This is neither fair or necessary in family law, but an unfortunate reality for many individuals who try to file for divorce on their own.

Adding insult to injury, this agreeableness usually results in that same spouse footing the bill for their own legal fees, adding to the burden of their monthly expenses they may or may not be able to afford.

As such, it’s important that you always retain a lawyer in your divorce case.

Setting an Example

So as to get through the following possible situations where a bad divorce may result in unexpected financial consequences later on, we are going to use a hypothetical situation.

Let’s say that you were divorced several years ago and agreed, along with your spouse, that you would keep the home you and your family lived in. This is usually followed by filling out a quitclaim deed (a document used to transfer the ownership of property from one individual to another).

After you and your spouse go separate ways, you might think your ties to one another are severed. Depending on your paper trail, this might not be the case.

When an Ex-Spouse Files for bankruptcy

After your separation, you or your spouse might find yourself in a challenging financial situation. There may be joint debts to contend with, unexpected filing fees, unmanageable living expenses, and a whole host of challenges that come after two individuals go through a financial separation.

Depending on the situation of you or your ex-spouse, it may be a good idea to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy depending on your needs. If you choose to file, this could help with bills by enacting an automatic stay (which prohibits debt collectors from collecting on your debts), restructuring your monthly payments to be manageable (such as in Chapter 13) or even completely absolve suffocating credit card debt (such as in Chapter 7).

However, be cautious. For individuals who filed for divorce themselves, choosing bankruptcy could have severe and unexpected consequences for their previous spouse, especially if their paperwork was not properly completed.

When an Ex Comes Back to Haunt You

This is when problems start to occur– potentially years down the line. These issues, commonly, fall into two categories: unfinished quitclaim deeds and cosigner debt.

Quitclaim Perils

In the above situation, many people are not aware that a step is missing: the quitclaim deed needed to be recorded in the local courthouse. Without this step, the deed is not active. Therefore, if your former spouse filed for bankruptcy, their creditors can consider your home a retrievable asset.

Signer and Cosigner

As the name suggests, cosigned debt is that which you are responsible for as a cosigner to a loan. Being a listed signer, you have an equal financial responsibility to the loan, even if you are not the one making payments. As such, if you are cosigned on a loan which you ex-spouse later defaults on, it will result in creditors coming after you.

Furthermore, this loan (and lack of ability to pay it) will show up on your credit report, as well.

When to Contact a Bankruptcy Attorney

No one wants to be stuck in a situation where they are being punished for their ex-spouses debt. Unfortunately, it happens more often that people recognize. If you find yourself in a similar bind, it might be time to contact a bankruptcy attorney.

Making a positive impact on the lives of others is why I opened up the Jeffery B. Kelly Law Office— I want to make sure each one of our clients leaves in a better position than when they came in and my staff feels the same.

Our team is effective and responsive to your questions, helping you file and complete your bankruptcy without having to worry about confusion or legal jargon. Give us a call today at 770-637-1756 to find out how we can help.

Divorce in Joint Bankruptcy Cases

In a joint case, your attorney has an ethical duty of loyalty to both the husband and the wife.  How can your bankruptcy attorney be one hundred percent loyal to you and your spouse at the same time if a conflict arises?  Its impossible.  As a result, most attorneys will withdraw from representing either party.  Any attorney that fails to withdraw in conflict situations may face sanctions from the Bankruptcy Court.

Example of Conflict in a Joint Bankruptcy Case

An example of a conflict that would force a bankruptcy attorney to withdraw from the case is a reaffirmation agreement.  Lets say you have a husband and wife that are joint signers on a note for a 2009 Monster Large Truck.  The husband loves the Monster Truck and does not want to give it up at any cost.  In contrast, the wife is ready to get divorced and move on with a fresh start in life.  In this scenario, it is clearly not in the best interest of the wife to reaffirm this debt.

Lets say she reaffirmed this debt.  A few years down the road, ex-husband is remarried and has two children by his new wife in his new life.  Out of the blue, he loses his job.  He can no longer afford the Monster Truck.  Sadly, the car creditor repossesses the Monster Truck.  Then, the creditor follows Georgia law and auctions it off.  Unfortunately, the Monster Truck sells for less than half of what is owed to the creditor.  Guess who is going to get sued for the deficiency?  Drum roll please.  The answer is the ex-wife.  She thought she moved on with a new start in life.  She had heard about his new wife and children.  She thought it was all behind her until the Floyd County Sheriff show up at her house one fine summer afternoon in front of all the neighbors and served the lawsuit from the creditor.

In divorce situations, it is always best for debtors to have separate attorneys.

Since hiring a new attorney to review your entire case and proceed with continuing the case is expensive, most joint debtors will beg their attorney to keep representing them both to save money.  In this situation, the attorney will have the clients sign an agreement stating that they understand the potential for conflict and that the attorney will withdraw from representing either debtor in the event a conflict arises.

In cases where there is no secured debt or when every type of secured collateral is being surrendered to the creditors, the chance for conflict is low.

Other Posts

1.  Bankruptcy and Divorce Orders

2.  Should I File Bankruptcy Before or After the Divorce?

3.  How Much Does it Cost to File Bankruptcy?

4.  What is Chapter 13?

After the divorce, my client had a tough time paying his child support and his living expenses. Hoping that his situation would improve, he incurred some credit card debt to make ends meet. Unfortunately for my client, things did not work out as he hoped. He lost his job and had to file bankruptcy.

His major concern was that if he filed bankruptcy, would a bankruptcy trustee try to take back the house away from his ex-wife? Would his property transfer be at risk as a result of the bankruptcy? As a general rule, the answer to this question is no. Georgia bankruptcy trustees do not try to overturn a divorce order unless there are extremely exceptional circumstances.

It is extremely important in every bankruptcy case to disclose all transfers of any type of property that has occurred within the last two years.

In the bankruptcy petition, statement of financial affairs question number 10 specifically requests the information. In this section, a bankruptcy debtor must disclose the date of the transfer, the recipient of the transfer, the relationship of the recipient to the debtor, the fair market value of the property in question, and the amount of any debt owed on the property at the time of transfer. I like to specify that the transfer was made pursuant to a divorce decree.

It is always a great idea to have your bankruptcy attorney review your order from the divorce court. If there any issues, you want to discover them before your bankruptcy case is filed.

Failure to completely answer all questions in the statement of financial affairs can land you in jail. At the very least, it will make the bankruptcy trustee suspicious of you and put your case under even more scrutiny.

Other Posts:

1. Should I tell my attorney everything?

2. How do I protect my assets in a bankruptcy?

3. Top Ten Myths About Bankruptcy

4. Personal Injury Lawsuits Must be Listed in your case!

I understand that some couples may be in such a heated situation that they both want the divorce to come as fast as possible.  However, sometimes it makes sense to slow things down and to file bankruptcy before getting divorced.

Avoid Future Headaches

A common post-divorce example is that each spouse is ordered by a divorce judge to pay half of all joint debts.  When one person gets into a situation where they can’t pay, the other person often hauls them back into divorce court for a contempt proceeding for not paying the joint debt.  Usually the cause of one spouse not paying is a loss of job or new expenses from a new marriage/new family.  Contempt proceedings in divorce court may get the nonpaying ex-spouse to come up with funds to avoid going to jail in the short term but the underlying situation does not change.  Whatever the cause, the nonpaying ex-spouse cannot pay.  This cycle continues until the person who has been paying their side of the debts can no longer afford to pay an attorney to keep hauling the other person into divorce court.  After thousands of dollars and heartache, both end up filing bankruptcy.

Get a Fresh Start

Many times, it just makes sense to go ahead an wipe all of the debt so that both people can move on with their lives without having a continued string to their ex-spouse.  In my office, it does not cost a dime extra for a married couple to file together.  However, once the divorce takes place, two separate cases would have to be filed which means double the cost of what it would have been if there has been a joint case.

Couples who are under financial strain should consider bankruptcy before the divorce.  It does not cost anything to meet with me and let me analyze your situation.  Perhaps the removal of the financial strain might save the marriage?

Other Posts You Might be Interested in Reading:

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Can I keep my tax refund and still file bankruptcy?

5.  Should I get my tax refund before I file bankruptcy?