If you've been through a difficult divorce, then you understand how much the whole experience can wreak havoc with your life. When your divorce has left you having financial difficulty, you have options. While debt such as student loans, income tax, and child support payments can't be erased through a bankruptcy, other unsecured debts can be. If you have credit card debt and you are barely making minimum payments, or if you are struggling to pay off old debt from your marriage, you have the right to file for bankruptcy. While you may feel like a failure for having to file bankruptcy, it is important that you come through your divorce successfully. This is often accomplished by filing for bankruptcy once the divorce is complete.
Debt That Gets Erased from Filing a Chapter 7 Bankruptcy
During a divorce, marital debt will get divided up just like marital assets do. If you live in an equitable distribution state, you will end up with what is considered your fair share of both the debt and assets. If you live in a community property state, half of the marital debt is yours. What's important to recognize is that not all debt is created equal when it comes to filing a bankruptcy. You don't want to get left with all of the tax debt from your marriage, because you can't get rid of it in a bankruptcy filing. Credit card debt, utility bills, and a repossessed car can all be taken care of through a bankruptcy filing.
Understand That Your Divorce Decree Doesn't Matter to the IRS
If you left the marriage and there was significant income tax debt, you need to negotiate the payment of this debt as best as you can. Whether you ask that the debt be paid from the proceeds of a house sale, or you insist that an IRA goes to back income tax debt, it's important that you try to get back taxes settled right away. Even if your divorce decree states that your ex is responsible for any existing tax debt, this does not matter to the IRS. You are both legally responsible for your marital debt until it is paid.
You need to get your life back under control after a divorce, and this means making sure your financial future is secure. When you are drowning in debt that you can't pay back, it's time to meet with a bankruptcy attorney that can help. Contact a law firm such as O'Brien and Dekker Attorneys at Law for more information.