Florida individuals who plan to get a divorce from their spouse may have to seek bankruptcy protection first. One woman plans to divorce her husband but is worried that she may face future debts. For instance, she pays the mortgage. He doesn’t. She plans to move out. He plans to let the house go into foreclosure while he continues to reside there because he can’t pay the mortgage. She questioned if she would have file for bankruptcy before filing a divorce petition.
Anyone in this situation would first have to find out if they were liable to pay the mortgage. Second, he or she would see if the state has anti-deficiency laws. Under anti-deficiency laws, the individual would only be responsible for the difference between the amount owed on the property and what it sells for at auction. If the individual is liable for the mortgage and has other secured debts, then they would seek debt relief by filing bankruptcy.
A person filing bankruptcy should make sure he or she is eligible to file Chapter 7 prior to filing. Once eliminated from liability for most of the debt, file for a divorce. Last, sell the property. This action should happen after filing for bankruptcy or divorce. In some cases, it may mean selling the property for less than it’s worth. Of course, this may not be an option if the other spouse is not willing to sign the short sale paperwork.
Many people who are anticipating filing for divorce may also need to file for bankruptcy protection because of mounting debts. Individuals in this situation may hire a bankruptcy lawyer to help them. A lawyer may look at the person’s finances to see which bankruptcy option they are eligible for.
Source: Fox Business, Which should i file first: Divorce or Bankruptcy?”, Justin Harelik, July 10, 2013