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Spousal Maintenance (Alimony)

Filing for Bankruptcy Before, During or After a Divorce

Filing for bankruptcy before or after divorce

 

Money and financial issues are the top cause of arguments between spouses, according to a 2018 survey that was conducted by Ramsey Solutions. Financial stress is also the second leading cause of divorce after infidelity. These statistics show that there is little wonder that many couples who plan to divorce may also be in financial situations that necessitate filing for bankruptcy.

If you want to file for divorce and also want to file for bankruptcy, the timing is important. When you are trying to figure out whether to file before your divorce, at the same time as you are divorcing, or following your divorce, there are several things that the experienced attorneys at the Cantor Law Group thing that you should consider.


Filing for Bankruptcy Before Your Divorce: Pros and Cons

There are several ways that filing for bankruptcy before your divorce can benefit you. If you file for bankruptcy first, you and your spouse will only have to pay one filing fee and can share the legal fees of your bankruptcy attorney. Filing for bankruptcy first can also make the property division portion of your divorce case simpler. In a normal divorce, the court will divide both the assets and the debts. If you and your spouse secure a discharge of your unsecured debts, neither one of you will have to pay them after you receive the discharge. This means that the court will not need to divide them.

It is also important to note that if a judge orders your spouse to pay a debt that you share, the court’s order will not impact the creditor. Since the creditor is not a party to your divorce, it can go after either you or your spouse to collect payment. If you do not obtain a discharge of a debt through bankruptcy, the creditor can seek to collect what is owed regardless of the family court’s orders. If it is discharged in a bankruptcy that you and your spouse file before you file for divorce, the creditor may not engage in any further collection activities for that debt against either you or your spouse.

Filing for bankruptcy before your divorce also has a few disadvantages. If you plan to file for Chapter 13 bankruptcy instead of for Chapter 7 bankruptcy, it may be a better idea for you to wait to file your bankruptcy case until after your divorce is finalized. This is because of the differences between these two types of bankruptcy.

Read More about Bankruptcy During and After Divorce…

Legal Separation vs Divorce in Arizona

Legal Separation vs Divorce in Arizona

What is the Difference Between Legal Separation and Divorce?

While a legal separation is uncommon, it is still used by some couples in lieu of divorces. There are several reasons why people choose legal separation instead of a divorce. In some cases, it may make more sense for a couple to become legally separated while in others, it may be better to file for divorce. Before deciding which you want to choose, it is important that you understand the differences between legal separation and divorce and the potential benefits and drawbacks of each.

Legal separation has some similarities to divorce but has some key differences. When a couple gets divorced, it terminates their marriage. Their property, assets, and debts are divided between them, and the court issues orders regarding child custody, child support, and possibly, spousal maintenance. When a couple chooses legal separation instead of divorce, it is a formal process through which a couple separates without getting divorced. The court will issue orders about the division of the property and debts, child custody and support, and possibly, spousal maintenance. However, the couple will still be married.

People who are legally separated still must answer that they are married on their tax forms and on other forms. They also are not free to marry other people since they are married. While many couples who get legal separations will eventually divorce, some choose to remain legally separated instead of getting divorced for a variety of reasons. If a legally separated couple does choose to eventually divorce, the orders from their legal separation will be incorporated into their divorce decree.

Read More about Legal Separation vs Divorce…

Impact of Changes in Tax Law on Spousal Maintenance in Arizona

For people that signed a prenuptial agreement before getting married believing that there may be a chance that they and their spouse may divorce in the future, the Tax Cuts and Jobs Act that was signed into law on December 22, 2017 can potentially seriously affect the agreement that was reached. A major change occurred with the passage of the law stating that spousal maintenance or alimony is no longer be tax deductible after 2018 to the spouse who is paying it and will no longer need to be claimed as income by the person receiving it.

A separation agreement or a judgment of divorce must be signed within the calendar year of 2018 directing that spousal maintenance will be considered tax deductible in future years according to the new law. Prenuptial agreements can address spousal maintenance in a few different ways, some of which are:

Spousal Maintenance is Waived by Both Parties

In some prenuptial agreements both parties may consent to waive spousal maintenance altogether. If this describes your prenup, then the new law will not have an impact on you.

Spousal Maintenance is Waived Unless a specific Event Occurs

Some prenuptial agreements state that the lower earning spouse will be entitled to maintenance if there are children or if some other event happens during the course of your marriage such as a certain discrepancy in income between both spouses this new law may have an impact on you.

When Spousal Maintenance will be Awarded in a Divorce

A specific prenuptial agreement often states that spousal maintenance will be paid and also states how the amount or duration of maintenance will be determined. In such a scenario this law will definitely have an impact on you.

Read More about Tax Laws and Spousal Support…

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