Divorce During Chapter 13 Bankruptcy In Las Vegas, Nevada
Sometimes, life hits you all at once, whether that’s financial issues, relationship issues, or any other types of issues that may be relevant to your personal circumstances. There are legal procedures meant to assist you and help you transition through these life changes. For a household struggling with overwhelming debt, bankruptcy can provide debt relief and protection from creditors that is crucial during financial struggles. But there are two main types of consumer bankruptcy for different needs and means, and they operate quite differently- especially if a married couple in an active bankruptcy case ever decides it’s time for divorce. Are you looking for more information about what happens to a married couple who gets divorced while in chapter 13 bankruptcy in Las Vegas, Nevada? Read on for more on this subject, and for your free consultation with an experienced Las Vegas bankruptcy lawyer, call 702-842-0700.
Chapter 13 Bankruptcy Basics
Most people are fairly familiar with how divorce works, but are far less familiar with the ins and outs of chapter 13 bankruptcy. Chapter 7 bankruptcy is the more popular form of consumer bankruptcy, and is therefore what most people base their bankruptcy assumptions around, but it operates differently than chapter 13 in many ways. Chapter 13 lasts much longer and pays off debts instead of simply wiping them away. Major changes to the household- such as divorce- can throw off the payment plan.
Divorce interferes with many aspects of bankruptcy, and vice versa. It freezes assets, making it impossible to divide them up as is necessary during property division in divorce. Some spouses continue living together while a divorce is being finalized, but it is rare for that to carry on after the marriage has been dissolved. Dividing into two households drastically alters a budget, and it may no longer be possible for the spouses to pay off their mandatory debts (bankruptcy costs, secured debts, and priority debts) with two sets of household bills to pay.
Steps To Filing Chapter 13 Bankruptcy
- Assess your financial situation thoroughly and make sure that you qualify, including if your case would last 3 years or 5 years.
- Calculate your disposable monthly income and reasonable expenses to determine your plan payments.
- Create your bankruptcy petition, including all schedules, household inventory, and creditor mailing matrix.
- Complete your first online credit counseling course.
- File the petition, credit counseling course competition certificate, and any other necessary documents in court. This is when the automatic stay goes into place, protecting valuable assets from creditors seeking collection.
- Comply with any requests made by the bankruptcy trustee.
- Attend the 341 Meeting of Creditors.
- Complete a second online credit counseling course and file the completion certificate in court within 60 days of the 341 Meeting of Creditors.
- Attend the plan confirmation hearing. A chapter 13 bankruptcy debtor may be required to submit an unconfirmed payment before attending this hearing to keep their case in good standing.
- Make plan payments and continue complying with any trustee requests and updating counsel and the trustee of any major financial changes. This continues for 3 years if household income falls below the state median household income, or 5 years if it meets or exceeds that level.
- Move forward with a clean slate once your case has been discharged.
What To Do About Divorce In Chapter 13 Bankruptcy
Because chapter 13 bankruptcy payment plans are based on household income rather than individual income, it can make a case complicated or impossible to complete if a married couple in joint bankruptcy wishes to separate. The lifespan of a chapter 13 bankruptcy case- 3 to 5 years- is a long and arduous wait for a couple who are ready to get divorced. If a married couple needs chapter 13 bankruptcy debt relief and divorce around the same time, there are a few different legal strategies they can consider:
- Case dismissal: Getting a chapter 13 bankruptcy case dismissed is as easy as missing a plan payment, so a married couple could voluntarily dismiss their case if they wanted to prioritize getting divorced first. Whether this is a worthwhile endeavor depends on factors like how far into the plan the couple are, and the reasons behind them getting divorced. After the case has been dismissed, the spouses can get divorced and would then have the option to file their own bankruptcy cases separately.
- Case conversion: In some cases, the court will allow a chapter 13 bankruptcy debtor to convert their case to chapter 7 bankruptcy. This can be beneficial for spouses on the verge of divorce, because chapter 7 bankruptcy cases generally last 3 to 5 months as opposed to chapter 13 bankruptcy’s 3 to 5 years. A conversion will only be allowed if the spouses’ household income before or after the split qualifies them for chapter 7 bankruptcy.
- Case bifurcation: Some married chapter 13 debtor spouses can still afford chapter 13 bankruptcy after getting divorced. If so, they can request that the court bifurcate their case, or split it into two separate cases. This way, their plan payments will be based on their new individual situations rather than their previous married situation.
- Case modification: Rather than dividing a case, a payment plan’s terms can sometimes be changed to fit with the debtors’ life adjustments. This is only an option if mandatory debts can still be paid after the modification.
Domestic Obligations & Chapter 13 Bankruptcy
Domestic obligations can be a huge factor in both bankruptcy and divorce. Affording chapter 13 bankruptcy may no longer be possible for a spouse who is ordered to pay child support and/or spousal support in a divorce. Domestic obligations could also be a debt that forces a person to consider bankruptcy. But these are priority debts, so they can’t be wiped out by chapter 7 bankruptcy, and a filing of this type won’t even stop a child support wage garnishment. Here, the only way to stop a garnishment (which can be up to 65% for a parent with no other dependents 12 weeks or more in arrears) is by filing a fully-paid chapter 13 bankruptcy. For more information on domestic obligations and chapter 13 bankruptcy, schedule your free consultation with our firm today at 702-842-0700.
Facing Debt & Divorce In Las Vegas? Consult With An Experienced Bankruptcy Attorney Today
Debt could be a cause for your divorce, and divorce could cause your debt situation to worsen. Some situations can’t be saved, despite our best efforts to do so. When a marriage is over, spouses can get divorced, and when debt gets out of control, debtors can file for bankruptcy. But doing both at the same time is often highly inconvenient, especially when the bankruptcy case in question is a chapter 13 bankruptcy. If you see both in your future, it’s important to understand what will happen if you take certain steps in a certain order. You can discuss your situation in further detail with one of our experienced Las Vegas bankruptcy lawyers with no risk or obligation. Schedule your free consultation with Vegas Zero Down Bankruptcy Lawyers today by calling 702-842-0700.
Zero Down Bankruptcy Lawyers
Phone: (702) 842-0700
Email: info@vegaszerodownbankruptcy.com
Las Vegas Office
5552 Ashley Creek St
Las Vegas, NV 89135
North Las Vegas Office
7251 W Lake Mead Blvd
Las Vegas, NV 89128
Henderson
1489 W Warm Springs Rd #110
Henderson, NV 89014
