By Alfred Villoch, III, with Savage, Combs & Villoch, PLLC
Divorce is often the catalyst for bankruptcy. After divorce, finances are stretched. There are new budgetary constraints. One partner might lose health insurance or the insurance might become more costly for the ex-spouse. Alimony and child support become additional expenses to pay. Some start having to pay new expenses such as child care, and others will find their expenses increased because no longer are they splitting bills and living expenses with their former partner.
A particular trigger for bankruptcy is the former marital home and the mortgage. When a married couple owns a house, typically one spouse keeps possession and the other spouse will agree to make or help out with the mortgage payments. Unless the couple refinances the mortgage, both partners will remain legally responsible for the mortgage debt. The problem arises when, for whatever reason, the mortgage goes unpaid and falls into default. This drags the co-obligor – who doesn’t even live in the home – into a foreclosure lawsuit and starts to severely damage that person’s credit score. One spouse can file for bankruptcy, leaving the other spouse adrift and fully responsible for the mortgage.
Similarly, like the mortgage instance above, another trigger for bankruptcy are joint credit cards in both spouses names. Most couples have at least one joint account when they split. If the debt isn’t paid off right away, it will usually end up being the responsibility of one spouse, and if he or she doesn’t pay it, then both credit reports (and by extension credit scores) will suffer.
Many of these issues can be avoided or at least mitigated with a skilled family attorney who can help a couple in divorce anticipate new financial challenges and to legally separate one another from joint debt. Sometimes, however, these financial issues cannot be avoided. In those instances, it is important that you contact an experienced bankruptcy lawyer. At Savage, Combs & Villoch, PLLC, you can speak with a Tampa Bankruptcy Attorney who can help you understand these issues associated with divorce and to let you know if bankruptcy or some alternative is right for you. Contact us now at 813-200-0013 and www.savagelaw.us.