The short answer to that question is yes, a bankruptcy will affect your divorce. As prominent former hand surgeon, Michael Brown, who is divorcing his fourth wife, has discovered. In Mr. Brown’s case, his divorce has been delayed because of bankruptcy issues which include a possible default on a $750,000 loan and lack of insurance. He also may face further headaches because the delay caused by the bankruptcy may increase his financial obligations to his wife for additional attorney’s fees and domestic support obligations. Clearly, this is not an ideal situation for any couple divorcing.
When one bad event feeds off another
Sometimes one bad thing leads to another or at least happens in concert, making a tough situation worse. In fact, in a NY divorce it is not uncommon for couples seeking dissolution of their marriage to find their mutual financial troubles rearing its ugly head.
While a spouse may not discharge alimony or child support in a bankruptcy proceeding, he or she may discharge their share of any joint debt. Which could in effect ruin or seriously damage the other spouse’s credit.
Other issues that may arise if one spouse decides on bankruptcy include:
• Business interests
• Real estate ownership
• Retirement and other benefits
• Bank and savings accounts
Just as a divorce ends your legal relationship with each other, a bankruptcy ends your legal obligation to pay certain of your debts. And rather than battling your ex spouse on two fronts, working toward an amicable agreement through NY divorce mediation may yield better results for both of you. A mediated divorce can help you work through the issue of debts, marital property and other financial matters so that each party obtains a result that is fair and does lay undue burden on either.
Get a NY divorce mediator’s help with serious financial situations
Divorce gets more complicated when serious financial issues are involved and in that case it is important to speak to an experienced attorney. To learn how a bankruptcy or other serious financial issue affect your divorce and legal options, talk to a New York divorce mediator today.