How Will Filing for Bankruptcy Affect My Divorce?
Divorce can be a complicated and expensive process depending on your situation, and in some cases those costs, whether they’re related to the divorce proceedings or other factors can put a considerable strain on your financial situation.
It’s not uncommon for people to file for bankruptcy before or during their divorce, and it’s important to understand how it can affect your situation. Filing for bankruptcy will not have an effect on establishing child custody or support, but it will stop the proceedings over how your property will be divided. Instead, your property will become part of your bankruptcy estate, and a stay will automatically go into effect prohibiting actions to exercise control obtain that property.
Whether you file for Chapter 7 or Chapter 13 bankruptcy, the court will appoint a bankruptcy trustee to your case, and they will have different powers depending on which type of bankruptcy you filed for.
If you filed for Chapter 13 bankruptcy, the trustee will not sell your property off to pay back your creditors. They will still need to determine the value of that property in order to determine what you owe your creditors, and will set a three-to-five-year repayment plan for you to follow. In Chapter 7 bankruptcy, the trustee will have the power to sell off your assets in order to pay back creditors – if they sell off joint property, then your spouse will be paid the value of their share from those funds.
At the Harris Law Firm, our Denver divorce attorneys have spent years working with people across Colorado in need of experienced and passionate legal representation. We understand just how difficult a divorce can be to both you and your entire family, and we will work with you every step of the way to ensure that you are put in the best position possible to secure the outcome you need. Send us the details of your case through our online form to schedule a private consultation with a member of our firm, or call us at (303) 622-5502 today to discuss your options moving forward.