Filing for bankruptcy is not an easy decision. Most people do not come to this decision lightly, and many who choose it are already coming out of another messy situation -- divorce. If you are divorced and realizing that you cannot financially make ends meet and your burden of debt is too much, you can consult with a bankruptcy attorney. Just be aware that if you are the one that received the house in the divorce, you may lose it entirely during a bankruptcy. Here is how that typically happens:
You Live in a State Where Keeping the House Comes with Requirements
Some states require that you show that you can continue making payments on the house after the divorce and during a bankruptcy filing and discharge. If you cannot, the judge could order you to sell the house, and use whatever profits gained to pay your debts and help you move into an apartment. Granted, this would be an uncommon occurrence, but it does happen.
Your Decision to File for Bankruptcy Affects Your Ex's Credit
If you received the house in the divorce but you have not transferred over the title into your name alone, filing for bankruptcy negatively affects your ex's credit. The house is named as an asset in your bankruptcy filing; as such, your mortgage lender can and will notify the other party of the bankruptcy. Your ex can then sue for the house to save it from being lost in the bankruptcy and prevent damage to his/her credit. In this way, you may lose the house after winning it from your ex in the divorce proceedings.
The Marital Home Is Supposed to Be Sold and Profits Split, but Becomes the Means of Debt Consolidation
Probably one of the worst-case scenarios that can happen in another handful of states is when you are recently divorced and the judge rules that no one gets the marital home. Instead, the marital home has to be sold, and the profits have to be split between you and your ex. If you file for bankruptcy before the home is sold, the home is listed as an asset for sale, and all of the profits from the sale could be seized or ordered by the courts to pay for your debts. This might create more issues with your ex, so it is a good idea to ask your bankruptcy lawyer how to proceed in this situation (if it applies to you).
For more information, contact a bankruptcy attorney in your area today.