Bankruptcy and Divorce Attorney in Kennewick, Washington
It is unfortunate but not surprising that bankruptcy and divorce frequently go hand in hand. Money problems and other financial issues can cause problems even in the happiest and most secure marriages. And conflicts and stress linked to financial matters are one of the leading causes of divorce.
Instead of dividing assets in court, many couples are attempting to resolve the issue of their shared debts. While some choose to file for bankruptcy with their spouse before the divorce, others decide to file months after the divorce is finalized.
If you are trapped between bankruptcy and divorce, the most crucial decision you have to make is “when” to file for bankruptcy and divorce. Knowing the benefits and drawbacks of each potential filing date might help you make the best decision.
A credible bankruptcy and divorce attorney in Kennewick, Washington, can walk you through the process and your options. What are you waiting for? Give us a call now!
Why do I need a Bankruptcy and Divorce Lawyer in Washington?
Divorce and bankruptcy are more frequent than many realize. Financial difficulties intensify the difficulty of a divorce that is already difficult. If you are contemplating divorce and have financial problems, you may wonder if you need a bankruptcy and divorce lawyer in Washington.
Bankruptcy and divorce do not only require knowledge of each practice area. It requires extensive legal experience dealing with both areas combined and great compassion. Patrick D. McBurney, Jr., Attorney at Law, a bankruptcy and divorce law firm in Kennewick, may be able to assist you in making the right decisions for your future.
We can help you with the following:
- Make a proper assessment of your current financial situation
- Identify your joint and separate properties and liabilities
- Assess whether it’s best to file for bankruptcy before, during, or after marriage
- Pursue your best interest in negotiating a divorce settlement
- Represent you in all legal proceedings
At the bankruptcy law firm of Patrick D. McBurney, Jr., we are proud to employ our over 25 years of experience to assist clients in filing for bankruptcy while undergoing the divorce procedure. Even in the most complicated divorces, we have the knowledge and skills to serve as your guides and advocates.
No matter the circumstances, our attorneys are prepared to answer your concerns and protect your best interests. Speak to us now!
Bankruptcy and Divorce
Not every marriage succeeds, and a significant number of marriages fail due to financial problems. Whether you’re divorcing because you’re drowning in debt or your divorce is the cause of your debt, bankruptcy may be able to help you recover.
Your marital status and the terms of your divorce settlement can impact your ability to file for bankruptcy. It is necessary that you consult a bankruptcy and divorce attorney before moving further and making a life-changing decision.
Types of Bankruptcy Options
Chapter 7 bankruptcy and Chapter 13 bankruptcy are the two most common types of bankruptcy. A married couple can file for these bankruptcies separately or together. A thorough assessment of your circumstances may help determine the most suitable option. Reach out to a seasoned bankruptcy and divorce attorney to assist you in evaluating your options.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is also referred to as liquidation bankruptcy. It is the quickest, simplest, and most common type of bankruptcy in which debts are discharged by selling all of your nonexempt properties and distributing the proceeds to your creditors. It does not include a repayment plan. Once the proceeds from the sale of your nonexempt asset have been depleted, the bankruptcy court will discharge your remaining debt.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is also referred to as “wage earner’s plan” bankruptcy. It allows individuals with a steady income to modify their debts. It can enable you and your spouse to restructure your finances and construct a repayment plan to repay all or a portion of your obligations. Over the course of three to five years, you will propose a monthly installment plan to all of your creditors.
What to Consider Before Filing for Bankruptcy and Divorce in Washington?
When it comes to filing for bankruptcy and getting a divorce, you have a lot of choices and considerations to make. Your Washington-based bankruptcy and divorce legal counsel can guide and advise you on the things you need to know.
You need to make a list of all your assets and liabilities.
You are required to compile a list of all of your assets and properties before filing for bankruptcy and divorce. You also need to compile a list of all of your creditors and debtors in an open and honest manner. You have a responsibility to determine which possessions and debts are held individually and which are held jointly.
Bankruptcy will not relieve you of your child support obligation.
Child support is one of the few debts that cannot be discharged in bankruptcy. If you are having difficulty meeting your child support obligations, you may want to consider petitioning the family court for a support modification. Otherwise, the debt will keep growing, leading to serious consequences.
You can declare bankruptcy before or after your divorce.
Most couples want to know whether it is better to file for divorce before or after their divorce. This is entirely dependent on your assets and debt, as well as what you intend to keep after the divorce. Your Washington bankruptcy and a divorce attorney can collaborate to help you decide whether a joint bankruptcy or a separate bankruptcy before or after divorce, would be more beneficial.
You have the option of filing for bankruptcy jointly or separately.
Whether you file jointly or separately is determined by your willingness to collaborate. For example, filing jointly doubles your exemptions, which may allow you to keep valuable assets such as your home. However, if only one spouse files before divorcing, the other spouse will be liable for any discharged joint debt. The divorce attorney for the non-filer can negotiate partial or equal repayment in the marital settlement.
Washington is a community property state.
Assets and debts both partners incur during their marriage are considered part of the marital estate. Both the assets and obligations will be split between the spouses. You should anticipate that a state judge would distribute all marital property equally. Income, stocks, royalties, rents, cars, marital residence, bank accounts, 401(k) accounts, credit card charges, and other assets or debts accumulated during the marriage are all considered community assets.
Your bankruptcy will be affected by the division of assets in your divorce.
Finally, be prepared to list all of your assets from the divorce settlement when you file for bankruptcy after the divorce. People who receive spousal or child support must report it as income, while those who pay it must declare it as an expense. The bankruptcy court will also review transfers made during the divorce proceeding.
Filing for Bankruptcy Before Your Divorce
here are multiple advantages to filing for bankruptcy before your divorce.
- Divorce and Bankruptcy Cost. You and your spouse will only be required to pay one filing fee and can split your bankruptcy attorney’s fees.
- Division of Properties. Filing for bankruptcy before divorce may simplify the split of property. In a typical divorce, the court divides both assets and liabilities. If you and your spouse can obtain a discharge of your unsecured obligations, neither of you will be required to pay them after receiving the discharge.
- Marital Debt Discharge. If the divorce judge orders your husband to pay a joint debt, the court’s decision will not affect the creditor. Since the creditor is not a party to your divorce, it can pursue payment from either you or your husband. If you do not secure a discharge of a debt through bankruptcy, the creditor may pursue collection of the debt against the decisions of the family court. If it is discharged in a bankruptcy proceeding before filing for divorce, the creditor cannot pursue additional collection actions against you or your spouse.
There are also downsides to declaring bankruptcy before your divorce. And it will depend on the type of bankruptcy you intend to file.
- Chapter 7 Bankruptcy. Your nonexempt assets will be liquidated to repay a portion of your marital debt to your creditors. If you file for Chapter 7 bankruptcy, you may lose a few assets. The main challenge with this bankruptcy is passing the means test.
If you and your spouse both work and your combined income exceed the median income in the state of Washington, you may fail the means test. If your household also has a high disposable income, passing the means test may be difficult. Meanwhile, you can take advantage of Marital Adjustment Deductions to help you qualify.
- Chapter 13 Bankruptcy. If you filed for Chapter 13 joint bankruptcy, you and your spouse would enter into a joint repayment plan that would last three to five years. You can choose it if you are parting on good terms and don’t mind having a shared repayment plan. If not, however, it is in your best interest to finalize your divorce prior to filing for bankruptcy.
Filing for Bankruptcy and Divorce At The Same Time
Declaring bankruptcy during a divorce is never a wise decision and should be avoided at all costs. The proceedings regarding your divorce and bankruptcy will have an effect on one another, which will create a delay in both proceedings.
Divorce petitions are submitted in state court, while bankruptcy petitions are filed in federal court. When you file for bankruptcy, the federal court typically imposes a stay that halts all ongoing lawsuits against you. This includes a divorce proceeding in state court, so if you had already filed for divorce, you would need the bankruptcy court’s approval to continue your divorce proceeding concurrently with the bankruptcy.
There are two primary reasons why filing for bankruptcy and divorce can quickly complicate your situation. It is strongly recommended to seek legal advice from a trusted bankruptcy and divorce lawyer in Washington to help you understand the complexities of this matter.
Bankruptcy and Divorce Courts Look at Your Income Differently
In general, bankruptcy courts examine your income in two distinct ways. They evaluate your current income, which is based on your latest two months of salary, as well as your income for the previous six months. Divorce courts see income differently, using income to calculate equitable distribution and, in some situations, child support or alimony obligations. Therefore, it may not be a bright idea to have a bankruptcy court review your income when attempting to determine your equitable distribution in divorce court.
Bankruptcy and Divorce Courts View Your Assets Differently
A second reason it’s difficult for the federal bankruptcy and state court to handle bankruptcy and divorce processes concurrently is that they see assets differently. A bankruptcy court is interested in your assets to assess if any can be distributed to creditors. In contrast, a divorce court examines your assets to distribute them between you and your spouse. If both spouses are in an active bankruptcy proceeding, the bankruptcy court will not want the divorce court to distribute the assets.
Filing for Bankruptcy After Your Divorce
Some individuals choose to file for divorce first, followed by bankruptcy once the divorce is finalized. This may be advantageous under certain circumstances.
- Chapter 13 Bankruptcy. Filing for bankruptcy after divorce is advantageous if you intend to file for Chapter 13 bankruptcy. You may be able to retain more properties, and you do not have to share a repayment plan with your ex-spouse.
- Chapter 7 Bankruptcy. If you plan to file for Chapter 7 bankruptcy and did not pass the means test as a married couple, waiting after your divorce case has been finalized may help you qualify for Chapter 7 bankruptcy.
- Marital Debt Discharge. If you and your spouse cannot get along, it may be advantageous to file for bankruptcy protection after the divorce. If your divorce is difficult, it may be advisable to file for bankruptcy after the divorce has been finalized. This can enable you to seek a discharge of your obligations without requiring your spouse’s cooperation in your bankruptcy case.
Filing for bankruptcy after divorce also has its fair share of disadvantages.
- Divorce and Bankruptcy Cost. If you and your husband both need to file for bankruptcy, waiting until after your divorce is final will require you to pay your own filing fee for your bankruptcy petitions, resulting in higher legal bills overall.
- Division of Debts. When an ex-spouse files for bankruptcy after a divorce, the division of debts previously decided by the family court in the dissolution case can become an issue. If your ex-spouse was ordered to pay a joint debt in the divorce proceeding and receives bankruptcy discharge afterward, the debt does not simply disappear.
Your spouse’s discharge won’t affect the creditor’s ability to collect from you. You can’t execute the family court’s order that your ex-spouse repay the debt since the bankruptcy court’s order supersedes it.
Divorce Impact on Bankruptcy
When it comes to the equitable distribution of marital property, bankruptcy is affected by divorce. In the state of Washington, any property acquired during the course of a marriage, as well as any other assets, are required to be divided equally:
- Equity in a home
- Bank accounts
- Retirement funds
- Recreational vehicles
- Any other assets
If your husband files for bankruptcy before the judge finalizes your divorce, you may wish to file jointly if the majority of your debts are in both of your names. If your spouse files for bankruptcy before the judge finalizes your divorce, your divorce may be delayed.
Suppose you jointly file for bankruptcy prior to your divorce. In that case, you will be able to avoid many of the problems associated with negotiating the division of assets and debts, as the bankruptcy processes would have resolved the majority of these issues.
Bankruptcy Impact on Divorce
If you currently have a pending divorce case, the ongoing divorce proceedings connected to the division of property will be stopped.
The process of dividing property is automatically halted if a bankruptcy is filed. Nearly all of your property is transferred to the bankruptcy estate when you declare bankruptcy. In addition, the automatic stay, which forbids any attempts to obtain or exercise control over property that is part of the bankruptcy estate, takes effect. This covers the legal actions that take place during the divorce to split the property of the estate.
Bankruptcy and Marital Settlement Agreements
If you filed for a divorce with the knowledge that you or your soon-to-be ex-spouse will soon file for bankruptcy, make sure to hire a family law attorney who is savvy both with bankruptcy and divorce laws. There are a few things to take into account:
- You might not want to agree to pay debts under your ex-spouse’s name. The bankruptcy court will discharge only the debts in your name if you file for bankruptcy separately. No one wants to declare bankruptcy only to discover that they are still obligated to pay an ex’s debt under a family law order.
- Understand the distinction between a support order and an amount owed due to a property division. Child or spousal support helps an ex-spouse with day-to-day expenses. A property division settlement occurs when one spouse receives more property in exchange for an agreement that the other will pay the value of the property over time.
In Chapter 7, a debtor cannot discharge either order, but in Chapter 13, this is not the case. Although support obligations are not dischargeable in Chapter 7 or Chapter 13, a debtor can discharge a property division settlement in Chapter 13 bankruptcy. As a result, “support” payments are more secure than “property division” payments.
Consult with a credible bankruptcy and divorce attorney in Washington to help you ensure you avoid these mistakes.
Call our Seasoned Bankruptcy and Divorce Attorney in Kennewick, Washington, Now!
Bankruptcy is a complex matter. Divorce is equally a complicated matter. The state where you reside, the amount of property and debt you have, and the type of bankruptcy you desire to file are all factors that may help determine whether you should file for bankruptcy before or after a divorce. You are certainly up for a stressful, messy, costly, and lengthy legal proceeding.
If going through a divorce and filing for bankruptcy is an inevitable circumstance for you, good planning can make both processes less complicated and more cost-efficient. We at Patrick D. McBurney, Jr., Attorney at Law, can be your best option. Aside from bankruptcy law, we also offer legal services in family law and criminal law practice areas.
Discover how we can provide you with the best bankruptcy and divorce legal assistance. Contact us now!