As I’ve mentioned often before in these Indiana bankruptcy blogs, divorce is one of the three leading factors leading to bankruptcy (along with medical expenses and job layoffs). Sometimes, it’s financial problems that cause divorce; often divorce leads to financial problems for one or both of the couple. Whichever the chicken or the egg, these two negatives, while they may add up to a positive in arithmetic, (and even, in the long run, for the participants), short-term, they spell t-r-o-u-b-l-e.
Three basic principles are worth knowing right off the bat:
a) Bankruptcy deals only with debts that exist on the day you file. That means, if a divorce decree creates any obligations after that day, those won’t be included in the bankruptcy.
b) The general rule is that support obligations you already have from a divorce (child support, life and health insurance premiums, and alimony, for example) are not changed by the bankruptcy.
c) If you’re the one receiving the support, generally that money is exempt if you were to file bankruptcy.
Obviously, both divorce laws and bankruptcy laws are too complicated to be explained in three bullet points. I offered some further details in former blogs (Together For Debtor Or Worse and Together For Debtor Or Worse – It Depends), Having both your professional advisers (the divorce attorney and the bankruptcy attorney) talking to each other is a very, very good idea.
If divorce and bankruptcy are visiting your life at the same time, you’re suffering more than your share of stress, that’s for certain. Try to remember, this, though: both legal proceedings – divorce and bankruptcy – have the same basic goal, namely helping you make a fresh start. (People going through divorce and bankruptcy can use a fresh start – big time!)