Thursday

Divorce & Bankruptcy in Iowa

Divorce and bankruptcy go together like peas and corn.  Oftentimes, if a couple is keeping it cordial and will have an uncontested divorce, they will file their bankruptcy jointly before getting divorced.  This way there is only one attorney fee and only one filing fee.  It does require cooperation between the parties.  And if there is a conflict like who will take possession of the home or child custody, two separate attorneys would be needed for the bankruptcy as well since hiring one attorney would create a conflict of interest.

Bankruptcy can also smooth the divorce process whether filed before or after the Iowa divorce is filed.  Iowa is not a community property state, so you are not automatically liable for all debts of your spouse, but many married Iowan's do have joint debt.  When you are divorced, you may agree and the Judge may approve through a divorce decree which party is responsible for joint debt.  People tend to think that is the end of the discussion.  But because the lender was not a party to the divorce, they are not bound by this order.  So the bank can still pursue both parties even though the divorce court ordered payment of the debt by one party.

Hence, people will often file bankruptcy so they and/or their spouse will be free of the hassles of joint debt.  I've even seen cases where a party was pressured by the Iowa District Court Judge to file bankruptcy as part of resolving the divorce.  Judges probably can't actually order a party to file bankruptcy.  But they can impose sanctions and then give the party a chance to avoid the sanctions if they do follow through on their promise to discharge joint debt in bankruptcy.

Eligibility for bankruptcy can be helped sometimes by filing the bankruptcy after separation or divorce, especially for women.  If the husband has a high salary that might make it difficult to file a Ch 7 full discharge, the wife may find she is suddenly eligible to file Ch 7 individually once she is apart from him, especially if there are kids.

Conversely, sometimes the party with the higher income benefits from filing bankruptcy before the separation since they can count their spouse in their household size.

If you are paying child support, you get to include the kids you are supporting in your household size for Chapter 7 income eligibility.

If you are considering uncontested or collaborative divorce here in Des Moines and you have heavy debt, discharging the debt in bankruptcy can be a way to get a real fresh start after divorce.  Jeff also handles Des Moines, Iowa Criminal Law defense.

See Jeff's Des Moines Iowa Bankruptcy Blogger.  See Cheap Missouri Uncontested Divorce

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