The Need to Prove Bankruptcy Filing After Final Divorce Settlement and Debt Assignment

Divorce and credit play major roles in the dissolution of marriage often leading to the need to file bankruptcy. While bankruptcy isn't always necessary following the distribution of assets and liabilities, it does become a major concern for those couples with limited financial means or in cases where the family budget relied on two incomes. The contention relevant to the distribution of liabilities can be avoided if the couple is willing to work amicably to settle those issues, but when the divorce is one full of hostility this doesn't usually happen. These dissentions tend to happen more often in cases that involve adultery or only one of the parties wants a divorce. While the divorce lawyer can attempt to help the couple resolve these issues, he or she is not always successful nor is there a guarantee the couple will hold up their end of the agreement. 

In the event you choose to file bankruptcy before the final distribution of liabilities, you will need to produce proof that you are relieved of liability for those debts. You cannot simply show up in court and expect the judge to take your word that you are relieved of liability for those marital debts. There are many different reasons a couple may jointly or individually file bankruptcy prior to the final divorce decree, the following are some of the more common reasons:

• Reduction in income for one or both parties. This is especially important for the spouse who always stayed home with the children or in cases where the budget was based on two incomes.
• Increase in monthly expenses because of each party having to pay for individual living expenses
• The refusal of either parties in the divorce action to assume his or her assignment of the marital debts
• Failure to resolve financial issues
• Additional debt incurred as a result of the divorce

Unfortunately there are substantial numbers of people who must face bankruptcy as the result of divorce. While filing bankruptcy is one of the negative effects of divorce, it is important for you to understand the court and creditors require more than your word you filed bankruptcy. In addition, there are some debts that will not be discharged such as child support, back taxes and personal injury lawsuits. Your divorce lawyer can advise you on the best means to handle these non-dischargeable debts.

Before you make the decision to file bankruptcy, you want to remember it is likely to cause more problems than it solves because of the impact it will have on your credit history. Even though there are some issues that are serious effects of divorce, you should avoid bankruptcy if at all possible. Certainly if your marital debts are enormous, and you have no possible means to share any of them you have no other choice. However, it should be your last option rather than you first one. In addition, you should not file bankruptcy just to get out of paying your share of the marital debts.