D-I-V-O-R-C-E Leads To B-A-N-K-R-U-P-T-C-Y

Tammy Wynette had a hit on her hands when she recorded the song D-I-V-O-R-C-E. In it, she laments the fact that she and her husband are splitting up and tries to hide her sadness from her son. Wynette’s gut-wrenching delivery is punctuated by her sincerity — which probably had something to do with the fact that she herself was divorced multiple times.

Although Wynette made a good musical choice when she followed D-I-V-O-R-C-E with her massively successful Stand By Your Man, we have often wondered if she should have cut a record called B-A-N-K-R-U-P-T-C-Y. For many of our Milwaukee area personal bankruptcy clients, bankruptcy follows in divorce’s wake. 

This is not surprising when you consider two things. First, getting divorced is expensive. Legal fees can add up quickly if it is not an easy breakup, and it takes a substantial amount of cash to move out and move on, particularly if you have children. Second, after their divorce is finalized, many divorcees see their household expenses remain the same or increase while their household income is halved. 

Bankruptcy is often a great option for recent divorcees who want a clean financial slate to match their newly single status. Filing for bankruptcy under Chapter 7 is a quick way to wipe out many of your debts and get a fresh lease on life. 

However, it is important to note that many expenses related to getting divorced cannot be discharged through bankruptcy. Filing for bankruptcy does not eliminate the responsibility to make alimony or child support payments or wipe out payments that are overdue. If a court-ordered support payment is causing financial difficulty, the only way to get it reduced or eliminated is to go back to family court and ask for it to be adjusted.

Court fines or penalties and attorney fees related to a past child custody or support battle are also non-dischargeable. If you are finding these impossible to pay off, your best bet is to get them put into a repayment plan. Filing for Chapter 13 bankruptcy might be a good option in this situation. The Chapter 13 bankruptcy process includes a debt consolidation and repayment plan that lasts for three to five years. 

While most divorces related to bankruptcy are filed after the couple has split up, it is worthwhile to mention that filing jointly, before the divorce is finalized, may be beneficial to both parties. If the split is amicable, and it will not be difficult to cooperate and share financial documents with one another, filing bankruptcy before filing for divorce can help both parties land on a firm financial footing. Many couples take on debt jointly, so dealing with that through the bankruptcy process can be easier than sorting financial issues out in divorce court. 

If you are thinking about filing for bankruptcy, the experienced attorneys at Hanson & Payne, LLC are ready to discuss your options and guide you through the process. We will listen to your story and work with you to figure out your end goals, so we can help you find the best path forward. Please contact our Milwaukee office today to schedule an initial consultation