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How Bankruptcy Impacts Your Post-Divorce Finances

On Behalf of | Sep 11, 2019 | Firm News |

Filing for divorce is a life-changing event, impacting everything from your personal life to your finances. As you prepare to start life fresh, you may find that declaring bankruptcy is the best path to move forward. But how much can bankruptcy affect your post-divorce finances, whether it’s you or your ex-spouse filing?

Child Support

Child support is one of the few financial obligations that cannot be discharged by bankruptcy. If either parent currently owes child support payments, Chapter 7 and Chapter 13 bankruptcy will not erase that debt. Further, a person going through bankruptcy must still make child support payments as scheduled.

If you or your co-parent are struggling to make these payments, however, Chapter 13 bankruptcy can still help. Chapter 13 cases prioritize repaying debts through a manageable, structured plan. This allows parents to contribute to their child’s welfare without getting overwhelmed or taken to court in the process.


Alimony, like child support, is considered domestic support and a high-priority debt. It generally cannot be discharged through bankruptcy. You may, however, be able to work with the court to decrease payments, forgive late fees, and re-evaluate the original agreement based on your revised financial health.

If you currently pay alimony, you may also be able to renegotiate your payments when an ex-spouse files for bankruptcy. This is especially likely when an ex-spouse goes through Chapter 7 to shed shared debts or other obligations covered in the divorce. When in doubt, speak to your lawyer to ensure you are treated fairly through the proceedings.

Shared Debts

Joint debts are often some of the most contentious aspects of a divorce. When one ex-spouse declares a Chapter 7 bankruptcy, the other may end up responsible for all of the remaining debt. While the bankrupt individual is protected by an automatic debt collection stay, co-signers receive no such protection. This can leave either you or your ex-spouse in an awkward financial position.

In this situation, consider instead a Chapter 13 bankruptcy, which creates a stay of action against co-debtors as well. This means that debt collectors will not be able to target either you or your ex-spouse as the bankruptcy proceeds. If you find yourself on the wrong end of a Chapter 7 bankruptcy, consult with a lawyer to best protect your own assets.

Divorce Settlement Debts

A typical divorce settlement includes all of the financial factors listed above and more. Besides child support, alimony, and debt allocations, it can also include investment accounts, property division, and insurance policies. The parts of this agreement that fall under domestic support are not dischargeable, but other agreements may be more negotiable.


Assuming the full weight of a mortgage after a divorce is one of the most common reasons for bankruptcy. The increased financial burden of monthly payments, sometimes coupled with child support, alimony, and various settlements, can all put a newly divorced person at risk of foreclosure.

In most cases, it is possible to go through either type of bankruptcy without losing your home. You will not, however, be able to wipe out both the mortgage debt and the lien on it allowing foreclosure under Chapter 7. If you want to keep the house, you must also keep paying the mortgage.

A Chapter 13 bankruptcy does not discharge most debts, but it can help make your mortgage payments more manageable. When working out a payment plan, monthly expenses, including housing, are factored into the amount of income not allocated to debt repayment. Barring emergencies, you should always have enough to live on after a Chapter 13 bankruptcy.

Divorce and bankruptcy are both complicated legal subjects, particularly when they occur in close proximity. If either you or your ex-spouse are considering filing for bankruptcy, make sure you have the best representation possible. Contact us today at the law office of Travis Van Winkle LLC to begin protecting your future.