Making a recovery when divorce leads to bankruptcy

Marriage dissolution often leads to significant financial strain. When two incomes become one, or when assets become divided, the financial impact can be overwhelming. 

In some cases, divorce may even lead to bankruptcy. The situation is particularly challenging in Colorado, where the interplay between divorce and bankruptcy laws adds another layer of complexity.

The link between divorce and bankruptcy

Divorce and bankruptcy frequently go hand in hand. The legal and financial obligations of divorce, such as alimony, child support and the division of property, can create an unsustainable financial burden. Credit card debt, mortgage payments and other liabilities add to this burden. It is not uncommon for divorced individuals to lean on bankruptcy as a last resort.

The impact of Colorado equitable distribution laws

In Colorado, divorce and bankruptcy often intersect, creating a complex financial landscape. Colorado follows equitable distribution laws, which means the court divides marital property fairly but not necessarily equally. This division can leave one spouse with a larger share of the debt, making bankruptcy more likely. 

Timing is also a determining factor. Filing for bankruptcy before divorce allows a couple to discharge joint debts together, which can simplify property division. However, filing for bankruptcy after divorce may be necessary if the division of assets and debts proves unmanageable.

Your recovery options when divorce leads to bankruptcy

There are multiple recovery options for those facing both divorce and bankruptcy. Chapter 7 bankruptcy offers a quicker resolution by liquidating non-exempt assets to pay off debts. This option can be suitable for those with little property to protect. Chapter 13 bankruptcy, on the other hand, involves a repayment plan that lasts three to five years. This option allows individuals to keep their property while repaying debts over time.

Navigating bankruptcy after divorce requires careful consideration of each option. Understanding the nuances of Colorado’s laws can help you regain financial stability. The combination of divorce and bankruptcy can feel overwhelming, but recovery is possible.