Category: Bankruptcy
Helpful Tips and Facts
How to Avoid Bankruptcy Post-Divorce?
Get a financially smart divorce by examining all of the financial issues. The most basic financial issue is your monthly budget. If you’ve forgotten a few items and your monthly budget is overstated by $300, you’ll be $3,600 over budget for the year. A series of small errors each month can add up to financially crippling consequences. Did you include the taxes that you will be paying on alimony into your monthly budget? How about insurance deductibles or HVAC service? Take the time to complete a thorough budget and create a solid foundation for your divorce settlement.
Take the The Debt Test
Here is a Consumer Credit Counseling Service debt test: Is your saving cushion inadequate or nonexistent? Are you using credit cards for items you used to buy with cash? Are you nearing the limit on your credit cards? Are you unsure about how much you owe? Is an increasing percent of your monthly income going to pay off debts? Are you only able to make minimum payments on your revolving credit cards? If you lost your job, would you be in immediate financial difficulty? Anyone who answer to two or more of these questions should consider getting help.
Debt Troubles? Talk to the Lenders
Lenders do not like to foreclose on borrowers. Foreclosure is expensive and unpleasant. Anyone who is having trouble paying the mortgage should explain this to lender who may be able to suggest relief. Sometime, for example, lenders permit troubled borrowers to service the loan with only interest payments for a time.
Filing for Bankruptcy Before or After Divorce
Extensive debt is often the reason for the breakdown of a marital relationship. If bankruptcy is advised as the best option, it is typically not possible for one spouse to file and the other not be affected. In a situation where one spouse wants to file for bankruptcy before the divorce, it is almost always the best choice for the other spouse to file as well. A good divorce lawyer will be able to determine whether before or after is the best option and what type of bankruptcy should be sought.
Divorce Chaos, Debt Quicksand
A divorce can derange personal finances, so it is very important to keep an eye on spending. It is very easy, particularly during the first days of a separation and divorce, to lose track of spending. If a person does not restrain himself or herself, he or she may emerge from what has been called "the chaos of divorce" only to sink in "the quicksand of debt."