FAQs About Bankruptcy And Divorce
- Q: I’m drowning in debt. Should I file for bankruptcy?
- A: If your credit card bills are sky high or you’re falling behind on your mortgage or car payment, bankruptcy* can be a way to get rid of the credit card debt and save the house or car. Bankruptcy will stop all legal actions against you, so if there’s a foreclosure, a credit card lawsuit, a utility shut-off, or repossession in the works, filing for bankruptcy will halt these actions.
- Q: I hear about all these different kinds of bankruptcies. What’s a Chapter 7 bankruptcy?
- A: A Chapter 7 bankruptcy is where you ask the court to discharge (get rid of) all of your unsecured debt (like credit cards) because you simply don’t have the money to pay them. If after paying your monthly rent or mortgage, car payment, utilities, food, gasoline, and other regular monthly expenses, you have no money left over for any payment to the credit card companies, then Chapter 7 may be the solution for you.
- Q: What’s a Chapter 13 bankruptcy?
- A: It’s a repayment bankruptcy. For somewhere between three and five years, you make monthly payments into the court, and the money is used to pay a portion of your debt. This is absolutely necessary if you’re behind on your secured debt, like your mortgage or car loan, and you want to keep the house or car. Chapter 13 stops foreclosures and car repossessions because you make a repayment plan to pay off the back payments that you owe, and continue to make your current payments. The great part of this is that YOU determine how much you can afford to pay each month, based upon your income and expenses. The creditors don’t dictate the terms; you and your attorney work together to create a payment plan that you can actually afford.
- Q: If I file for bankruptcy, will I lose my house?
- A: Probably not. As long as you are willing and able to pay the mortgage, your house is usually safe. Even if you are behind on the mortgage, you can keep your house by filing a Chapter 13 bankruptcy and making a plan to repay the back payments owed on the mortgage. And in some cases, a second or third mortgage (or home equity loan) can be eliminated or reduced.
- Q: I’m so embarrassed. All my life I’ve managed my money and paid my bills. How can this have happened to me?
- A: You aren’t alone. Most people file for bankruptcy only after they tried their very best to pay their debts. It’s usually something unexpected and beyond your control that happens, like losing your job, becoming ill, or getting a divorce, that forces people into these situations. We know you’ve done your best. But there comes a time when you need some help.
- Q: I’ve been sued for nonpayment of a debt or mortgage. How can bankruptcy help me? Isn’t it too late now that the lawsuit’s been filed?
- A: It is definitely not too late. Filing for bankruptcy will at least temporarily stop any legal action taken against you, including lawsuits, foreclosures and utility shut-offs. Even if the lawsuit is over and a judgment has been entered against you, filing for bankruptcy will often let you set aside the judgment and eliminate the underlying debt. If you are in debt and have received a utility shut-off notice, a notice of intent to foreclose or repossess property, or a notice of intent to sue for any reason, you should immediately see a lawyer.
- Q: My wife and I are separated and she’s filed for child and spousal support. Is it true you don’t need a lawyer because the court just looks at your income and uses a chart to figure out support?
- A: Sometimes it’s that simple, but most times it’s not. There are so many variables, like health insurance, self-employment, and child care, that have to be factored into a support order. Pennsylvania has support guidelines, but they’re exactly that: guidelines.
- Q: I’ve been living with my partner for seven years. Are we common law married?
- A: Maybe. The number of years is not important. But if you both think you’re married, and you’ve had some sort of a ceremony, and you’ve held yourself out to the public as being married, it may be true. In which case, if you go your own separate ways, you will need a real divorce. And, the common law marriage had to occur prior to 2005. Any common law marriage that began after January 1, 2005, is invalid and nonbinding.
- Q. If I file for a no-fault divorce and my husband agrees, can I be divorced right away?
- A: After you file for divorce, you have to wait at least 90 days until you can file the documents to have the divorce finalized. And, if there are assets to be divided, like a house or a retirement account, it can take longer.
- Q: My wife and I know how we want to split up our assets and debts. So why do we need a lawyer?
- A. A couple of reasons. First, you need someone to prepare the deed, the Court Order necessary to divide the retirement account, and any other document necessary to accomplish the plan you and your spouse have agreed upon. Second, you and your spouse might have overlooked some important aspect of getting divorced, and a lawyer can give you the necessary information so that the settlement you reach is comprehensive and complete.
- Q: My grandchild’s parent won’t let me see my grandchild! My grandchild and I love each other and we’ve always had great times together. Do I have any rights?
- A: Yes. If parents are separated and the custodial parent won’t let you see your grandchild, you can petition the Family Court for visitation or even partial custody (overnight visits). If you don’t want to involve the court, we can try to negotiate an agreement to allow visits, but, if the negotiations don’t go anywhere, the court is there to back you up and enforce your rights to see your grandchild.
If you have a question you would like to see answered in this space, let me know. Contact me at [email protected] with your question or comment. Then check back a week later, and you may see the answer printed here! I look forward to hearing from you.
*I practice law primarily in the areas of domestic relations and consumer debt. My law office is designated as a debt relief agency that helps people file for relief under the Bankruptcy Code.