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What Happens When Chapter 13 Bankruptcy and Divorce Meet?

 Posted on June 06, 2014 in Chapter 7 bankruptcy

Chapter 13, Chapter 13 bankruptcy reduction, San Antonio bankruptcy lawyer, Texas bankruptcy attorney, unsecured debt, convert to Chapter 7 bankruptcy, Chapter 13 plan, bankruptcy and divorceIt is no secret that financial problems can lead to the demise of a marriage. A Chapter 13 repayment plan can ease some of the financial tension that you may be experiencing. However, it cannot fix your marriage.

If you are in a Chapter 13 repayment plan, divorce can certainly change things. Here are the options that you can implement to deal with it.

Chapter 13 Reduction

You may opt to have your Chapter 13 plan reduced in order to make the payments more affordable based on the new circumstances. The type of debt that you carry has a lot to do with this option. Debts such as child support, IRS payments, delinquent mortgage payments, and alimony payments cannot be adjusted. These are all fixed payments. Most of the debts in a Chapter 13 plan are unsecured debt such as credit cards and loans. These can typically be adjusted; however, you do need to consult with your Texas bankruptcy attorney to see what the best option is for you.

Convert to Chapter 7

If you do not have any assets, or a very small amount of assets, converting to a Chapter 7 bankruptcy is also a viable option. Usually those who file Chapter 13 do so because their incomes are too high for the Chapter 7 plan. However, divorce changes this situation. While the income will remain the same, the expenses will double with a divorce now that there are two separate households to consider. There are two house payments, separate utility bills, and essentially no more shared expenses. There may also be issues of child support and spousal support to consider, as well as any division of assets such as cars.

If you do choose to convert to a Chapter 7 plan, make sure that you have your attorney assist you so that you can include any new debt that will be affected by the doubling of bills. If you are going through a Chapter 13 bankruptcy and are now considering divorce, please contact a San Antonio bankruptcy lawyer today at 210-342-3400.

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