October 1, 2020
Compassionate Lawyer Guiding Montgomery Residents Through Bankruptcy
Whether you lose your spouse due to divorce or death, the financial toll can be tremendous. Many marriages result in divorce due to financial trouble. Widowers also can suffer after the death of a spouse because of the loss of additional income from that spouse to pay off mortgages, cars, and other assets accumulated through the marriage. Any attempt to transfer some of the burden onto credit cards can result in more problems, since interest rates on credit cards can be up to 25%. At that point bankruptcy may become necessary for Montgomery residents, and it is essential to consult an attorney for advice. Ask Charles Grainger for help in going through this complicated process.
Choosing Between Chapter 7 and Chapter 13 After Divorce
It can be difficult for individuals who have not already been through a divorce or death of a spouse to understand the financial troubles that can ensue after the loss. But debt is not always due to overspending. It can also be the result of fees that must be paid to a family lawyer, medical and funeral expenses, multiple mortgages on your home, and car loan payments.
If you are financially overextended because of alimony and child support, you should be aware that you cannot discharge these particular debts through bankruptcy. Unpaid child support and alimony are given priority over the claims of other creditors. A spouse who is owed back support can file a proof of claim with the bankruptcy court to receive payment. However, bankruptcy may still help you because you can seek a discharge to get rid of other significant consumer debts, such as medical bills and credit card debts. A discharge thus could free up your income to pay alimony and child support with less stress and pressure.
Is it better to file for Chapter 7 or Chapter 13 if you lose your spouse? It depends on your particular situation. If you have a mortgage and vehicle payments that are burdensome due to the loss of income from your spouse, it may be beneficial to file for Chapter 13. Your lifestyle will have to change to allow for restructuring and repayment of your debts.
Chapter 13 only works for people who are able to commit to repaying a hefty chunk portion of their debts over a period of 3-5 years and have an income to support that commitment. The automatic stay will give you a little time to regroup, and you will have the opportunity to keep your home, your car, and other assets accumulated during your marriage. If your wages are being garnished, the garnishment usually will be stopped during bankruptcy. At the end of the Chapter 13 repayment period, assuming you have made all payments owed under the plan, you will get a discharge of the remainder of the dischargeable debts.
Chapter 7 may be more appropriate after the loss of a spouse if you do not have significant assets that you want to protect, you pass the means test, and you are not able to commit to paying back your debts over 3-5 years. Alabama’s system of exemptions will protect some of your assets but not all of them.
Seek Advice From an Alabama Bankruptcy Attorney
Everyone’s financial situation is unique. After the divorce or death of a spouse in Alabama, bankruptcy lawyer Charles Grainger can evaluate whether your situation makes you better suited to file for Chapter 7 or Chapter 13. In addition to offering bankruptcy representation, Mr. Grainger can also advise you on alternatives to bankruptcy. We serve South-Central Alabama clients from our offices located in Montgomery, Prattville, and Troy. Call us at (334) 260-0500 or contact us through our online form to start discussing your situation.