Los Angeles Bankruptcy: Your Divorce and Chapter 7
So often‚ a primary cause of divorce is ongoing disputes over money.
Unfortunately‚ the current economic climate has meant there are plenty of money problems to go around‚ and many couples simply aren’t able to make it work.
However‚ even if you can’t save your marriage‚ what many couples may not consider is that consulting with a Los Angeles Chapter 7 bankruptcy lawyer may save your finances.
It sounds like a double-whammy‚ but the truth is‚ when you’re forced to pare down expenses to make it all work on one income – not to mention that a California divorce can cost you up to $20‚000 in fees – you may have some tough decisions to make.
The good news is that a bankruptcy allows you to start with a completely clean slate – free of the credit card debt that you or your spouse racked up‚ the medical bill statements that were collecting in a pile and other bills that you have no real hope of paying off anytime soon.
If you’re separated but still married‚ you have the option of filing jointly‚ though you could file separately if one of you has significantly more debt than the other. Consider too that even if the debt is in your spouse’s name‚ you may still be liable for it‚ so it’s important to know where you stand ahead of time.
If you’re already divorced‚ you will each need to file on your own‚ even if you each do so at the same time. It’s strongly recommended that you each hire your own attorney.
There is a common misconception among many couples that if you earn over a certain amount of money‚ you won’t be eligible to file. This is not the case.
However‚ if you do intend to file for a Chapter 7‚ you will need to pass what is called the “Means Test.” This is a relatively new measure that was passed in 2005. The basic idea was that if you make more than the average income for your state‚ you should instead have to repay some of that debt by filing for a Chapter 13 bankruptcy‚ which gives you five years to catch up on your debts.
The average income in California is around $50‚000 (which is higher than most states). However‚ if you make more than this‚ a Chapter 7 still isn’t necessarily out of the question. Using the Means Test‚ you are allowed to subtract from your income certain expenses‚ such as your car payments‚ your mortgage‚ your alimony and health care costs. This often is what allows those who earn above the median income to qualify for a Chapter 7.
If you’re divorcing‚ you have to consider that even if the divorce order requires your ex to pay those joint debts‚ that doesn’t alter your contractual obligation to the company you owe. That means if he or she doesn’t pay‚ you can still be sued.
This is one reason why it is a good idea to file bankruptcy either jointly‚ or if already divorced‚ at the same time.
Even if you’re just thinking about divorcing and wondering whether you should also pursue a bankruptcy‚ a consultation with an experienced bankruptcy lawyer can be advantageous because it will give you a clearer picture of what will happen to your equity rights‚ homestead exemptions and tax obligations if you choose to leave the marriage.
If you are facing foreclosure in Los Angeles‚ contact Nader‚ Naraghi & Woodcock‚ APLC to schedule your free consultation. Call (800) 568-0707.