Houston, TX Divorce and Bankruptcy Attorneys

Guidance for Managing Divorce and Bankruptcy in the Houston Area

Getting divorced and filing for bankruptcy at the same time can make you feel like your world is falling apart. However, over time, you may begin to experience feelings of freedom and newfound financial security. If your spouse was an irresponsible spender and caused a significant amount of needless debt, it is important to talk to your divorce lawyer about whether any portion of that debt should be assigned solely to your spouse. It is also wise to consult an experienced Harris County bankruptcy lawyer who has worked with people going through both divorce and bankruptcy in the past.

The Fealy Law Firm, PC is skilled in assisting those who are getting divorced and filing for bankruptcy simultaneously. We will work with your divorce lawyer and your creditors to find the best possible solution for getting you relief from your debt. Attorney Vicky Fealy will carefully evaluate your marital finances and the types of debt you owe to help you make the best possible decision based on your unique circumstances and wishes.

Community Property and Debt in Texas

Texas is one of a few community property states. This means that marital assets and debts are to be divided 50/50 because each spouse owns them equally. This may place you in a difficult position if your spouse was irresponsible with money and created a lot of credit card debt. In addition, any debts that were shared by you and your spouse, such as joint credit cards, will be owed by both of you, regardless of the decisions you make during the divorce process. That is, if your divorce settlement states that your spouse is responsible for paying back certain debts, and they fail to make payments as required, the lender may take legal action against both of you to recover the amounts owed. By discussing this issue with your divorce lawyer, you can determine your best options for addressing debt-related issues.

Deciding When to File for Bankruptcy During Divorce

The first decision to be made is how to time your bankruptcy filing. Whether you should file for bankruptcy before filing for divorce, while your divorce is in process, or after your divorce has been finalized depends on many factors. You will want a lawyer to guide this decision, as filing at the wrong time could result in you owing more debt than you should.

Note that you cannot finalize your divorce while your bankruptcy is in process without court permission, as a marital estate cannot be formally divided until the court can be sure of what the estate actually consists. If your spouse is also filing for bankruptcy, it may be better to address the bankruptcy first.

Attorney Fealy can work with your divorce lawyer to determine when the best time to file for bankruptcy in relation to your divorce might be.

Should I File Chapter 7 or Chapter 13 Bankruptcy?

This is the next major decision you will need to make. If you own a family business, you may also need to consider whether you will file a business bankruptcy or find another way of dividing that asset.

Chapter 7 bankruptcy may be preferable if you own few assets that would qualify for liquidation or if your debt is so insurmountable that you cannot repay enough of it to satisfy your lenders. Although some of your property may be sold off to pay your creditors, you can walk away completely debt-free when it is over. You can also keep certain personal items like clothing, furniture, and family keepsakes up to a certain value.

It may also be easier to qualify for Chapter 7 bankruptcy as a single adult than as a married adult. There is a means test that is used to determine whether you should be able to repay your debts. If you are single and living alone instead of sharing living expenses with your spouse, you may be more likely to meet the requirements.

Chapter 13 bankruptcy can be a little more complex, but it does not involve liquidation. It does, however, involve a repayment plan in which nearly all of your disposable income will go toward repaying your debts. You would likely go several years or more without having much disposable income, which can make life as a divorced person challenging when you are trying to set up a new household. However, some marital debts that would not be dischargeable through Chapter 7 may be addressed through Chapter 13.

Contact a Cypress, TX Divorce and Bankruptcy Lawyer

The Fealy Law Firm, PC is experienced in helping people who are getting divorced file for bankruptcy around the same time. Attorney Vicky Fealy can help you choose the best type of bankruptcy for you and determine the right time to file. Contact us at 713-526-5220 for a complimentary consultation.