Quick Answer: Bankruptcy after divorce often becomes necessary because divorce agreements don’t legally separate financial obligations to creditors, and splitting one household income into two separate lives creates unsustainable debt burdens. Filing for bankruptcy can provide the complete fresh start that divorce alone cannot deliver.
Question:
Dear Steve,
I just went through a terrible divorce and now have a terrible debt situation and I don’t know where to begin to get out from under this. My next step feels like its bankruptcy but Im not sure.
I own a fitness business and nothing else.
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What should I begin to do to get my life in order?
Billy
Answer:
Dear Billy,
You might want to look at some of my past articles about bankruptcy after divorce.
From my point of view, bankruptcy after divorce feels like the necessary second part of a painful situation.
When you file for divorce you are trying to separate your lives and get a fresh start from the relationship. But ironically a divorce does not legally separate your finances.
While you and your spouse may come to an agreement on how old debt and obligations are repaid, that agreement has no bearing or authority on the creditors. So the past debt is now what binds you together. Typically in stress and strife. Who needs more of that?
I’ve yet to meet anyone who wanted to get a partial divorce. They typically want to move ahead with their lives without any ties to the other person, other than maybe kids.
The other big issue following a divorce is what happens when a two income shared household suddenly becomes a one income divided household. You now need to create two lives on a portion of the previous pool of available money. The math just doesn’t add up.
My opinion is you might as well take this moment in your life to get a total fresh start and consider a bankruptcy to get yourself back on track.
I would suggest that before you leap to any conclusions, one way or the other, that you meet with a couple of local bankruptcy attorneys and talk to the about your specific situation.
Know Your Rights: If a debt collector is contacting you, you have legal protections. See the complete list of FDCPA violations collectors commit most often. Use the free Debt Validation Letter Generator to demand proof of the debt, or check this collector’s complaint history with the Scam-O-Meter.
Dealing With Debt? Before you pay a collector, understand all your debt relief options — including ones the collector won’t tell you about. If the debt feels unmanageable, take the 2-minute bankruptcy quiz to see if the math favors a fresh start. Federal Reserve research shows filers recover faster than those who don’t file.
Billy, I just answered your question.