How Does Bankruptcy Affect Divorce in Houston, TX?
It’s not particularly uncommon for people to experience both marital stress and financial stress at the same time. In fact, in many cases, financial stress is the reason for marital stress which can lead to divorce for some couples. That same financial stress can also lead to bankruptcy for either or both spouses. If this sounds familiar, you might wonder how bankruptcy affects divorce in Texas.
How does bankruptcy affect divorce in Houston, TX?
No matter the cause, whether it’s irresponsible spending, unexpected expenses or a downturn in the family business, financial stress is a major factor that leads to divorce in Texas. If you find yourself in this type of situation, and you’re considering bankruptcy while going through a divorce, there are a few things you’ll need to know.
An automatic stay is imitated by the bankruptcy court once you or your spouse file for bankruptcy. What does that mean? Well, the stay will bar any creditor from garnishing your wages or collecting any money from you that could go toward your debts. In order to proceed with a divorce amidst the bankruptcy stay, a temporary order to lift the stay would be necessary to deal with matters related to the divorce.
Should you file for bankruptcy before or after a divorce in Houston, TX?
It’s important to know, first and foremost, that while bankruptcy is meant to help reorganize debts in a manageable way, filing for bankruptcy is not free. So, as a couple, it’s wise to consider that if you choose to wait until after a divorce to file for bankruptcy, you would end up paying all of the fees associated with the bankruptcy process (filing fees, credit counseling fees, and attorneys fees) twice as each spouse would be responsible on their own.
You should also consider that there is an income ratio requirement in order to qualify for bankruptcy. So, choosing to file before a divorce can help to demonstrate a larger household in an attempt to meet the bankruptcy income requirements.
Will you still have to pay child support or alimony if you file for bankruptcy in Texas?
Child support and alimony obligations are unaffected by a bankruptcy. So whether you file for bankruptcy before, after or during a divorce, any obligation to pay child support or alimony ordered by the court remains in place.
If you are behind on child support payments, Chapter 13 bankruptcy does allow for parents to prioritize catching up on those payments before other debts. So, if a parent is at risk of slipping too far behind, Chapter 13 bankruptcy may help avoid jail time while they catch up.
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