Does Divorce Affect Bankruptcy in Texas?

 Posted on March 05,2024 in Bankruptcy

Divorce and bankruptcy are two of life’s most challenging experiences, and they often go hand in hand. If you are considering filing for bankruptcy and are also going through a divorce, it is essential to understand how these two legal processes can impact each other. A Texas lawyer can help you determine how you could be affected in your specific situation.

The Timing of Your Bankruptcy Filing Matters

If you file for bankruptcy before your divorce is finalized, your bankruptcy case will include all of your marital assets and debts. This means that any property you and your spouse own together and any joint debts will be subject to bankruptcy proceedings.

On the other hand, if you wait until after your divorce is finalized to file for bankruptcy, only your assets and debts will be included in the bankruptcy case. This can be advantageous if you want to protect certain assets or have significant individual debt you wish to discharge through bankruptcy.

The Impact of Divorce on Your Bankruptcy Exemptions

Under Texas law, certain assets are exempt from being seized or sold in a bankruptcy case. These exemptions can include your homestead, personal property, and retirement accounts. However, if you are going through a divorce, the division of your marital assets can impact your ability to claim these exemptions.

For example, if you and your spouse own a home together and you are awarded the home in the divorce, you can claim the homestead exemption in your bankruptcy case. However, if your spouse is awarded the house, you may not be able to claim the exemption, even if you are still liable for the mortgage debt.

The Role of Domestic Support Obligations in Bankruptcy

If you are obligated to pay child support or alimony as part of your divorce settlement, these obligations are considered domestic support obligations under bankruptcy law. Domestic support obligations are not dischargeable in bankruptcy, which means that you will still be responsible for paying them even if you file for bankruptcy.

If you are behind on your domestic support obligations at the time you file for bankruptcy, the bankruptcy court may also prioritize these debts over other types of debt. Your domestic support obligations may be paid before other creditors, such as credit card companies or medical providers.

Contact a Fort Worth, TX Bankruptcy Attorney

If you are going through a divorce at the same time as seeking bankruptcy, you may feel overwhelmed. An Arlington, TX bankruptcy lawyer can help you so the process can feel less daunting. Call Acker Warren P.C. at 817-752-9033 for a free consultation.