The connection between divorce and bankruptcy

For many people in New Jersey, the financial angst that may accompany a divorce is as difficult as the emotional trauma that can result. This may be the case if money was a source of conflict or challenge before you and your spouse discussed divorce. It can also arise out of the divorce process itself. Forbes indicates that some people end up filing for bankruptcy when they get divorced.

Even if you and your spouse were financially stable before your divorce that can easily change afterwards. Generally speaking, income levels drop while expenses increase. From a credit perspective, your debt to income ratio takes a hit. In addition, if the disparity is big enough, you may find yourself unable to stay current on bills. This not only further hurts your credit score but sees the mound of debt around you grow.

Another situation involves how your former spouse manages any previous joint debts. Even if your ex-partner is to have responsibility for specific bills, a failure to pay those could negatively impact you since your name is on those accounts. Some couples are able to work together well enough to file for a joint bankruptcy before they file for divorce. In other cases, this is not possible and one or both spouses end up filing for bankruptcy individually once the divorce is final.

While bankruptcy can be an effective means of getting a fresh start, it is important to note that support obligations are generally not able to be discharged. To learn more about your options for managing financial difficulties before, during, or after a divorce, visit the New Jersey financial and family law page at our website.