Your Ex or Soon-to-Be Ex Is Threatening Bankruptcy: What Now?
Bitter spouses will stop at little to gain the upper hand in divorce. One surprisingly common tactic: threatening bankruptcy in hopes of securing leverage. For others, however, bankruptcy may be a valid option, rather than a scheme for control. Keep reading to learn more about the role of bankruptcy in divorce proceedings:
Genuine, or Revenge Filing? Your spouse may have a long history of financial difficulty, but if bankruptcy arrives just in time for your dissolution, you have every reason to be suspicious. Revenge should have no place in a divorce, but many people view bankruptcy as a way to either get back at spouses or exert control.
Before you respond to your ex’s threats, determine whether there is any actual need for bankruptcy, or whether this is a ploy to get you to play ball. Your attorney can help you determine your ex’s true intentions, and how to proceed accordingly.
Determine Your Ex’s Eligibility If you retain access to your ex’s financial information, you can easily determine his or her likelihood for qualifying for chapter 7 or chapter 13 in the first place. If your ex is clearly ineligible for proposed bankruptcy proceedings, threats should hold little sway.
Consider the Upsides of Bankruptcy In some cases, pre-divorce bankruptcy may actually benefit both spouses. Liquidation bankruptcies (also known as chapter 7) can greatly simplify the property division process. By filing prior to divorce, you and your spouse may receive protection against joint debt. Pre-divorce chapter 13 tends to be less ideal, as it extends the divorce process and forces you to trust in your ex’s ability to adhere to a payment plan—which you may doubt if your ex possesses a history of financial irresponsibility.
Does Bankruptcy Impact Child Support or Custody? While bankruptcy prompts an automatic stay for all property division matters, it rarely impacts child custody or support proceedings. Don’t let bankruptcy threats impact your fight for custody or visitation.
Unfortunately, it’s impossible to pursue bankruptcy and the financial aspects of divorce at once. If your ex threatens chapter 7 or chapter 13, take the situation seriously and examine your options.