what to be aware of when divorcing your spouse
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what to be aware of when divorcing your spouse

Every marriage is not meant to last forever. No matter what the reasoning behind the divorce, it is important to have legal representation for each side. I almost lost everything because my former spouse said that he was taking care of things and that he would be fair about how the assets were divided. It took several weeks for me to find out what he was up to. It was then that I hired my own attorney and got what I deserved. You should never attempt to go through a divorce without a lawyer working on your side. On my site, I have listed several of the issues that can get overlooked if you are inexperienced with divorce documents and proceedings.


what to be aware of when divorcing your spouse

When The Exemptions Aren't Enough: Consider Chapter 13 Bankruptcy

Joy Johnson

If you are considering chapter 7 bankruptcy, you may find that your state's exemptions—essentially, the property that is protected from your creditors—just aren't enough to protect your assets. Each state allows you to retain certain property in a bankruptcy, as long as it falls within one of the exemption categories and doesn't exceed the designated dollar limits. Chapter 13 is different because it allows you to retain far more property than a chapter 7 bankruptcy does. Keep reading to learn why chapter 13 bankruptcy may be the better option when the chapter 7 exemptions won't work for you.

Typical Exemptions in Chapter 7 Bankruptcy

The exemptions allowed in a chapter 7 bankruptcy typically fall into the following categories:

  • Homestead: This refers to your primary place of residence.
  • Auto: This refers to your primary vehicle.
  • Personal Property: This exemption can be used on anything in the home; for example, furniture and clothing.
  • Wild Card: Most states have a wild card exemption that can be applied towards anything. However, some states have restrictions. For example, in the state of Florida you may not claim a wild card exemption if you use a homestead exemption to keep your home.

If your state sets $20,000 as the homestead exemption but you have $40,000 in equity, you will be unable to retain the home in a chapter 7 bankruptcy due to having too much equity. In this case, the bankruptcy trustee will typically sell the property to distribute the money to your creditors.

Usually, the homestead exemption is by far the largest of the exemptions. The other exemption categories allow you to keep much lower dollar amounts worth of property.

The Chapter 13 Difference

In a chapter 13 bankruptcy, your amount of equity is much less important. If you have a great deal of equity in your property, the chapter 7 bankruptcy exemptions may fall many thousands of dollars short of covering that equity. Thus, your property would be sold off to repay debts if you proceed with a chapter 7 bankruptcy.

Chapter 13 allows you to retain the property that has too much equity to meet chapter 7 exemptions. Further, chapter 13 bankruptcy will allow you to keep multiple properties and multiple autos, regardless of equity amounts. This is something that chapter 7 bankruptcy prohibits, as it allows you to retain one vehicle and one home.

The important thing to remember about chapter 13 is that you can keep your property as long as you can pay for it. Your trustee will negotiate with your creditors to fashion new repayment plans for you. This will give you the chance to bring your loans up to date while keeping your property. Repayment plans are usually carried out over a three to five year period.

If you want to keep everything that you have worked for while still declaring bankruptcy, talk to a local bankruptcy lawyer. It is important that you learn how your state's exemptions can be applied to your situation, and how you can go with chapter 13 bankruptcy if those exemptions aren't enough.