Going through bankruptcy and/or foreclosure at the same time as divorce is difficult enough without additional legal barriers. Yet, if you are not careful, you may create problems or delays. The divorce attorneys at Lasiter & Jackson have handled many complex Arizona divorces that involve bankruptcy or foreclosure. We understand the divorce and bankruptcy processes and can help you reduce the amount of time, money and stress you spend on each.
Our law firm gives comprehensive advice in how to approach the timing of bankruptcy and foreclosures.
Bankruptcy after divorce: In Arizona, you and your spouse are legally responsible for any debt either of you incurred during your marriage. If one party files for bankruptcy after a divorce, the creditor can go after the non-bankrupt party to pay back any marital debts.
Bankruptcy before divorce: Going through bankruptcy proceedings before your divorce will eliminate or reduce both spouses’ liability for the marriage debts. It can also simplify your divorce by reducing or eliminating the amount of debt you would divide during your divorce and making division of marital property more manageable.
Divorce during bankruptcy: If you are currently in divorce proceedings, and decide to file for Chapter 7 or Chapter 13 bankruptcy, or you are going through a foreclosure, the court will put an automatic stay on your divorce. This means that you will not be able to proceed with your divorce until your bankruptcy is finalized absent pursuing support issues.
The difficult economy and housing market has made it hard for couples to divorce and maintain two households. Our lawyers provide guidance to divorcing couples dealing with foreclosure during divorce. Should you try to keep the family home? Is it possible to get a loan modification? How should you handle potential taxes if the home is sold? Is a short sale a plausible option?
If your mortgage is greater than your home is now worth (you have negative equity in your home/an upside-down mortgage), you may be able to negotiate with your bank to sell your home in a short sale. In a short sale, the bank sells your home at market rate and accepts the money received from the sale as full payment of your mortgage. While the house will be sold at a loss to your mortgage company, they may benefit from not having to go through the foreclosure process.
Our divorce attorneys can work in tandem with your bankruptcy attorney or the companies handling your foreclosure to ensure that everything is done properly and in the most effective order. Contact our law office in Phoenix, Arizona, to find out how our approach can work for you during this difficult time.