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It is no secret that financial troubles are a leading contributor to matrimonial anxiety and divorce. One recent study found that student loan debt is the cause of one out of eight divorces. Another survey found that money is the leading cause of stress in relationships. Whether debt, disagreements about how money should be spent, general incompatibility, or something else was the cause of your divorce, bankruptcy can quickly put your plans to a screeching halt.
Filing for Chapter 7 or Chapter 13 bankruptcy allows homeowners immediate relief from foreclosure due to the automatic stay, which also stops lenders and debt collectors from continuing their debt collection practices. However, bankruptcy, due to the automatic stay, also stops all property division actions. For Chapter 7 bankruptcy, the court appoints a bankruptcy appointee who has the power to sell off your property to pay back your debt. While Chapter 7 bankruptcy will delay the division of marital property, this form of bankruptcy is over with relatively quickly.
Chapter 13 bankruptcy takes between three and five years, a time during which you must adhere to a strict payment plan to repay your debt. None of your property is sold off to pay back your creditors during Chapter 13 bankruptcy, but if you are going through divorce and desire to divide marital property, you must get permission from the court to do so. As such, going through a divorce during bankruptcy is a complicated task, though in some cases it cannot be avoided.
Divorce is expensive, even when attorney’s fees are not included. Living apart during divorce usually means that spouses will have to pay extra rent, spend more on transportation, and take time out of their days and work schedule to drop the kids off at the other parent’s home. It is not uncommon for a spouse who is already having financial issues to declare bankruptcy during divorce, which is usually a multi-month-long process. As credit card debt builds up and mortgage payments are missed, bankruptcy may be your only choice to get through a difficult time or to hold off home foreclosure.
Division of marital property is only one aspect of divorce. Child custody and child support decisions will still go forward during bankruptcy.
Divorce is difficult enough in the “best” of times. When serious financial troubles and bankruptcy or foreclosure are thrown in the mix, it takes on an entirely different level of stress, anxiety, complication. However, do not despair; the dedicated DuPage County divorce attorneys at the Law Office of Martoccio & Martoccio are here for you. Contact us at 630-920-8855 to schedule a free consultation and find out how we can help.