What Happens If My Spouse and I Get a Divorce During Chapter 13 Bankruptcy?
Updated on 29 November 2023
For many debtors, Chapter 13 bankruptcy is truly the most effective way to find lasting debt relief. But in the three to five years it takes to work your way through a Chapter 13
repayment plan, your financial situation may change, whether you get married, switch jobs or - as many folks unfortunately do - go through a divorce.
If you filed for Chapter 13 with a spouse, a divorce will obviously shake things up. But it doesn’t have to derail
your debt relief plan. With over half of marriages ending in divorce, experienced bankruptcy attorneys have helped guide many divorcing spouses through their bankruptcy cases. If you’re
ending a marriage during your bankruptcy, you have several options to obtain your bankruptcy discharge.
Consult with Your Attorney
First and foremost, talk to your bankruptcy attorney. He or she will help you determine the best solution for your particular situation. Because representing both you and your now-ex
can present a conflict of interest, your attorney will also determine whether withdrawing and recommending another lawyer is the right choice.
Option 1: Keep Making Payments
Just because you are getting divorced doesn’t mean you have to change your payment plan. If you can afford to continue making regular payments, by all means, you should continue to do
so. Unfortunately, you may find that you and your ex disagree on how to divvy up payments. Additionally, the new financial strain of supporting two separate households can make it
increasingly difficult to afford your current payment plan.
Option 2: Convert to Chapter 7
Did you file for Chapter 13 bankruptcy because you originally earned too much disposable income to qualify for Chapter 7? Your new financial situation may make you eligible for a Chapter
7 bankruptcy plan. Unlike Chapter 13, Chapter 7 bankruptcy offers the ability to discharge most unsecured debts entirely, often in just a few months. However, Chapter 7 isn’t the best
choice for everyone. If you filed for bankruptcy because you wanted to stop foreclosure or protect your car from repossession, it may be safer to stick with Chapter 13.
Option 3: Modify Your Plan
If you are unable or unwilling to convert your plan to a Chapter 7, it may still be possible
to complete your Chapter 13 bankruptcy by lowering your repayments. In certain cases such as divorce, filing a motion with the bankruptcy court can reduce Chapter 13 plan payments.
Option 4: Separate Your Bankruptcy
One more option is to petition the bankruptcy court to separate – or “bifurcate” – your bankruptcy plan. Bifurcation creates separate bankruptcy plans for you and your ex-spouse,
allowing you each to decide how to proceed with your bankruptcy.
Divorce isn’t pleasant, but it’s a fact of life – and it doesn’t have to cost you your bankruptcy case. Because divorce leads to financial hardship in many cases (at least in the short term)
the protective benefits of bankruptcy can become even more valuable during this time.
If you’re considering a divorce during bankruptcy – or are considering filing for bankruptcy during a divorce – take the time to schedule an appointment with a knowledgeable bankruptcy attorney.
At DebtStoppers, our bankruptcy lawyers are experts at identifying the most advantageous debt relief strategy for you and your family,
no matter what your circumstances.
Option 5: Reassess Your Financial Situation
Going through a divorce can significantly impact your financial situation. It’s important to reassess your income, expenses, and debt to determine if your current Chapter 13 plan is still feasible. You may find that you need to make adjustments to your plan, such as reducing expenses or increasing income, in order to stay on track.
In addition, you may need to consider how your assets and liabilities will be divided in the divorce settlement. If you have joint debts with your ex-spouse, you may need to work with your attorney to determine how those debts will be paid off or discharged in bankruptcy.
Option 6: Consider Mediation
Divorce mediation can be a helpful tool for divorcing spouses who are struggling to reach an agreement on financial matters. A mediator can work with both parties to help them find common ground and come up with a plan for how to handle the bankruptcy case.
Mediation can also help to minimize conflict and avoid the need for expensive court battles. If you and your ex-spouse are willing to work together, mediation may be a good option to consider.
Option 7: Stay Organized
Divorce, divorce credit card debt and bankruptcy are both complex legal processes that require careful attention to detail. It’s important to stay organized and keep track of all paperwork and communications related to both cases.
Make sure to communicate regularly with your bankruptcy attorney and keep them informed of any changes to your financial situation. Keeping accurate records and staying on top of deadlines can help to ensure that your bankruptcy case stays on track, even in the midst of a divorce.
In conclusion, a divorce during Chapter 13 bankruptcy can be a challenging situation to navigate. However, with the help of an experienced bankruptcy attorney and careful consideration of your options, you can still obtain debt relief and move forward with your life.
Additional Information About Divorce During Chapter 13 Bankruptcy
If you and your spouse are going through a divorce while you are in the middle of Chapter 13 bankruptcy, there are several options available to you. Here are some additional pieces of information to consider:
Impact on Bankruptcy Discharge
The finalization of your divorce during Chapter 13 bankruptcy may impact your bankruptcy discharge. In most cases, you will still be able to receive your bankruptcy discharge, but there are some situations where the divorce settlement may affect the bankruptcy plan. For example, if your divorce settlement includes payments to your ex-spouse, this may impact your disposable income and affect your ability to pay your creditors.
If you and your spouse have joint debts, you will need to work with your attorney to determine how those debts will be paid off or discharged in bankruptcy. In some cases, the court may order your ex-spouse to pay their share of the debt, but this can be difficult to enforce. It may be necessary to consider negotiating with your ex-spouse or filing a separate lawsuit to collect the debt.
During a divorce, assets and liabilities are divided between the two parties. If you have assets that are part of your bankruptcy estate, such as a tax refund or personal injury settlement, this may need to be considered in the divorce settlement. You will need to work with your attorney to determine how these assets will be distributed.
Changes to Income and Expenses
A divorce can have a significant impact on your financial situation. You may experience changes to your income, expenses, and debt load. It is important to reassess your financial situation and determine if your current Chapter 13 plan is still feasible. You may need to make adjustments to your plan, such as reducing expenses or increasing income, to stay on track.
If you and your ex-spouse are struggling to reach an agreement on financial matters, mediation may be a good option to consider. A mediator can work with both parties to help them find common ground and come up with a plan for how to handle the bankruptcy case. Mediation can also help to minimize conflict and avoid the need for expensive court battles.
Communication with Your Attorney
During a divorce and bankruptcy, it is essential to communicate regularly with your attorney and keep them informed of any changes to your financial situation. Your attorney can help you navigate the legal process and make informed decisions about your debt relief strategy. Keeping accurate records and staying on top of deadlines can help to ensure that your bankruptcy case stays on track, even in the midst of a divorce.
In conclusion, a divorce during Chapter 13 bankruptcy can be a complex and challenging situation to navigate. However, with the help of an experienced bankruptcy attorney and careful consideration of your options, you can still obtain debt relief and move forward with your life.