How Cheap Divorces can Affect Bankruptcy | Jeff Kelly Law Offices

A Word of Warning: How Cheap Divorces can Affect Bankruptcy Later On

There are some situations where it may feel necessary to get a divorce that is quick, cheap, or both. While the circumstances leading up to these decisions vary depending on the individual, the end result is often the same: a botched job that is impossible to rework.

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.