Navigating Divorce and Bankruptcy in Texas: A Guide to Protecting Your Financial Future

 Posted on July 28,2023 in Bankruptcy

Divorce and bankruptcy can be overwhelming experiences. Specific rules regarding the division of assets, debts, and other financial matters must be considered when going through a divorce or filing for bankruptcy in Texas. It is essential to understand these laws to protect your financial future.

Understanding the Connection Between Divorce and Bankruptcy

In the United States, financial problems are a major reason for divorce. Dividing assets, paying legal fees, and adjusting to living on a single income during a divorce can create financial strain, leading to bankruptcy. On the other hand, bankruptcy can also stress a marriage and divorce.

When to File for Bankruptcy and Divorce

Filing for bankruptcy and divorce simultaneously can cause complications and negatively affect both processes. It is recommended to keep them separate unless there is a significant joint debt situation. If this is the case, filing for bankruptcy before the divorce can simplify the division and distribution of marital property by discharging debts.

However, filing for bankruptcy after a divorce could discharge the debts assigned to you during the divorce and safeguard your financial future. It is crucial to seek advice from a skilled attorney to determine the ideal action plan for your circumstances.

Dividing Debts in a Texas Divorce

The allocation of spousal debts is determined based on the principle of equal division between both parties, irrespective of the spouse responsible for incurring the debt during the marriage. However, debts acquired individually by either party before the marriage will remain separate and will not be subject to division.

It is important to note that Texas courts do not adhere strictly to a 50/50 split of property and debt, as they consider various factors to establish a fair and equitable distribution based on the concept of a ‘just and right’ division. The court conducts an examination of these factors to determine whether an alternative division of marital property and debt is warranted.

The Impact of Bankruptcy on Divorce Proceedings

If you file for bankruptcy while going through a divorce, it may cause some issues. Sometimes, the divorce proceedings can be put on hold due to an automatic stay resulting from the bankruptcy filing. This can make it difficult to divide marital property and determine child support promptly.

Additionally, bankruptcy can impact the division of assets and debts in a divorce. For example, certain assets may be exempt from bankruptcy and, therefore, not subject to division in the divorce.

Contact a Fort Worth Bankruptcy Attorney

Navigating divorce and bankruptcy in Texas can be challenging and emotionally draining. To protect your financial future, it is crucial to consult with a knowledgeable Texas divorce lawyer who can guide you through the legal complexities of both divorce and bankruptcy.

Source:

https://www.txwb.uscourts.gov/section-362-automatic-stay

https://www.texasattorneygeneral.gov/divisions/bankruptcy-and-collections