Going through divorce is difficult. Going through divorce and bankruptcy can be even more complicated and anxiety-driven. If you are legally separated or in the process of filing for divorce while going through bankruptcy, you have the option of separating your cases into two so that you and your spouse can do what you want with your case.
It is also best for each of you to consult with an attorney independently about how to proceed in order to avoid a conflict of interest. An experienced Central Valley bankruptcy attorney can also help you understand the complexities of a bankruptcy while legally separated or going through a divorce.
The Means Test During a Divorce or Separation
When you file for bankruptcy, you must have your financial situation evaluated by the “means test” and disclose all of your sources of income. Regardless of your marital status, you have the right to file bankruptcy individually.
Below is an overview of how the means test works:
Monthly Income — The means test compares your monthly income to your county’s median monthly income. If your monthly income is less than your county’s median income, then you are automatically eligible for Chapter 7 bankruptcy. If your monthly income is more than your county’s median income, then the bankruptcy court will further review your finances, as well as the disposable income you have left after paying your monthly expenses.
Disposable Income — If the court determines that you do not have enough disposable income to pay back your debts through a monthly payment plan, then you will be eligible to file for Chapter 7 bankruptcy.
The bottom line is that the means test is typically a complicated and important component to the bankruptcy process. Having an experienced bankruptcy attorney in Central Valley on your side to guide you through the process can make all the difference, especially if you are legally separated or in midst of a divorce.
The Impact of Separation or Divorce on Chapter 7 Bankruptcy
Everyone is well within their right to file for bankruptcy protection either with or without their spouse, whether legally separated, divorced or married. If you decide to file individually, your debts may be discharged through your personal bankruptcy filing. However, creditors may still seek out your spouse to satisfy the debt if he or she co-signed on the loan or credit card. If this is the case and you have concerns about co-signers on your debts, a Chapter 13 may be a better option.
Call an Experienced Central Valley Bankruptcy Attorney
If you are considering Chapter 7 bankruptcy, it is in your best interest to consult with an experienced bankruptcy attorney to help you learn your legal rights and options, especially with respect to Chapter 7 bankruptcy.