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Whether you like it or not, divorce and bankruptcy are connected. Financial troubles can lead to bankruptcy as well as divorce. Attorneys of Dallas based bankruptcy law firm Recovery Law Group reveal that nearly 14% of Jacksonville population filed for divorce at least once while nearly 11,000 people filed for bankruptcy in a year. Considering these statistics, there are bound to be some overlaps.
When you file for Chapter 7 bankruptcy, the combined income of the couple must be less than the state median income for a household of similar size. If both the partners are earning, living in the same house increases the average household income due to which they might fail to qualify for Chapter 7 bankruptcy. This converts into an even more stressful situation.
One of the primary things while considering bankruptcy is whether it is essential for both partners to file for bankruptcy. If all debts are in one spouse’s name, then bankruptcy can be filed by that person thereby protecting their partner’s credit rating. If, however, both have debts, filing for a joint bankruptcy makes much more sense as you can save on filing fees, credit counseling costs, etc. Another option available for a couple is that one of them files for Chapter 7 bankruptcy and wipes off all their unsecured debts, while the other opts for Chapter 13 bankruptcy and manages to reduce the principal amount and interest rate on the debts.
A divorce comes with its own set of financial problems. Often, divorcing couples have joint mortgages. Trying to keep the property might be unsuccessful because of inadequate financing. If they opt to “Short Sell” the property, they are still liable for any deficiency. Unfortunately for them, if they do not have strong financial backing, bankruptcy is the only way out for them.
Though it may not seem so initially, bankruptcy might be the best way out for you. If you are contemplating divorce or bankruptcy, it is important that you seek counsel from experienced lawyers by calling 888-297-6023.