Financial Considerations
Bankruptcy, unemployment, & underemployment
Can you file for bankruptcy when going through a divorce? What are your rights if your ex is unemployed or underemployed and owes you court-ordered support? Financial concerns are complex, so it is important you have an experienced family law attorney working on your behalf to help protect you from the financial decisions of your former or intended-ex spouse.
HELPING YOU FIX IT
Bankruptcy
You or your intended ex can file for bankruptcy during or after your divorce. Individuals or couples can file under Chapter 7, where unsecured debt can be discharged, and non-exempt property can be seized to repay debts. The filing of Chapter 7 may delay your divorce because you cannot divide assets that will be forcibly liquidated to satisfy community property debt.
You could also file for bankruptcy under Chapter 13, where the court establishes a repayment schedule over three to five years, and only a percentage of the debt is repaid. A plan can allow couples to split the required repayment installments between them as part of their divorce settlement, eliminate some of their debt, and enable them to start their separate lives with a somewhat fresh financial footing.
Your creditors are not a party to your divorce. They are not interested in the fact that you and your ex determined an equitable distribution of debt and have assigned responsibility to one or the other party. They will continue to view the debt as equally yours if your ex ceases to pay. If you think this is a possibility, you can check the “hold harmless” box in the Final Divorce Order form, but this may not be enough to satisfy a creditor. You may find yourself paying off debt that is technically not your liability and needing to sue your ex to recover that money and your attorney’s fees.
Spousal support payments and child support payments are not subject to discharge in bankruptcy, which means your ex cannot get out of those payments simply by filing for bankruptcy. Additionally, if you are owed back support payments, that debt is considered a first priority, meaning it will be paid through the liquidation of any assets your ex includes as part of their bankruptcy.
Contact one of our Washington-based family law attorneys to help you understand the impact of bankruptcy on your divorce or divorce settlement. If you or your ex is considering filing for bankruptcy before your divorce is finalized, it is highly recommended you consult with a bankruptcy attorney to determine your best course of action.
PURSUING WHAT IS RIGHT & FAIR
Unemployment & Underemployment
If your ex thinks they can reduce their responsibilities or avoid them altogether, they will be sadly mistaken. Washington allows judges to impute income for someone who is voluntarily unemployed or underemployed. Imputing means the court can determine what someone should be capable of earning. That number can be used to determine child support, spousal maintenance, or the division of property.
Imputing income does not necessarily apply to a long-term stay-at-home spouse. A family law attorney from our office can help you pursue what is right and fair while upholding the value and objectives you have discussed as being your priorities.
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