Reducing negative credit impacts in a divorce

On behalf of The Rollins Law Firm posted in Personal Bankruptcy on Thursday, July 18, 2013.

In a divorce, couples often face financial struggles over debts and assets. One common complexity involves mortgages and the marital home. Bankruptcy laws are designed to provide relief to persons facing overwhelming debt and may offer protection to divorcing couples in a struggling economy.

Divorcing couples in Mississippi may wonder what steps can be taken to minimize negative effects on credit resulting from a divorce. Persons in this situation should learn what protections are offered by state laws. For example, in anti-deficiency states, divorcing spouses are not liable for the difference between the amount remaining on the loan and the selling price at an auction in the event of a foreclosure. This may help make decisions regarding bankruptcy.

After determining that liability exists, the next step may be to file for bankruptcy. Before filing, persons should determine eligibility under Chapter 7 and Chapter 13 of the bankruptcy code. A Chapter 7 bankruptcy wipes out debt, both secured and unsecured. If filing for both bankruptcy and divorce, the bankruptcy should be filed first. After this is done, a petition for divorce can be filed.

In negotiating the divorce settlement, a spouse who has filed for bankruptcy should never agree to be responsible for joint debts. Although these debts are protected by the bankruptcy proceeding, a spouse may still be held liable if he or she agrees to be responsible in a divorce settlement. The home may then be sold if both spouses can agree to sell. This may circumvent some of the negative impacts on credit scores as a result of the divorce and bankruptcy. Divorce and bankruptcy laws are complex. Persons faced with this situation may need to consult an experienced bankruptcy law attorney who can assist with these issues.

Source: Fox Busniess, "Which Should I File First: Divorce or Bankruptcy?", Justin Harelik, July 10, 2013

Client Reviews
★★★★★
I had a wonderful experience. The staff were nice and very informative. The process was quick and easy. Very affordable for me being a single parent. Would recommend anyone there. - Lashay H.
★★★★★
The Rollins firm assisted me at a very low point in my life. After having a lot of medical issues and expenses, I found myself unable to make ends meet. Mr. Rollings and his staff worked very promptly to help. They made the process so easy to complete. - Vinester Smith.
★★★★★
Fast response and professional advice. Really great to work with and understand what a difficult time in one’s life this is. Will recommend to anyone - Bryan Aust.
★★★★★
My wife and I were in an impossible financial situation where over time, we had built up so much debt that we could no longer keep up with all the payments. We were getting further and further behind until we reached out to the Rollins Law Firm for help. They have the knowledge and expertise through their experience to handle our particular situation. Their entire team of professionals are always available to answer questions, explain your options, and then provide the legal service that you need to relieve your financial worries and get you back on the right track! I recommend the Rollins Law Firm to anyone who needs help to deal with financial struggles. - Mike Zegelien.