Divorce and Debt? Time to Call Us

divorce and debt

Life can be incredibly hard. And cruel. It can throw things at you faster than your ability to fend them off. Like having to deal with difficult finances and a failing marriage at the same time. Both consume you, day and night, while you are walking down the street, eating lunch, in between phone calls, sitting at your desk, or trying to get to sleep at night. Either one of these problems is enough to ruin your day, week, month, or year. Together, they can seem insurmountable.

How Can Steidl and Steinberg Help? 

We are not divorce attorneys or marriage counselors, but we can talk to you about your debt situation and, in many cases, what would be the impact on your situation if you separate or get a divorce.

When is the best time to contact us and seek an appointment? If you are thinking about these things, then the time is now. Really. Occasionally, people in your situation do get a hold of us, but do so after they have taken an action that might leave them worse off than if they would have met with us before they took that action.

No problem here, you say. My spouse and I have already agreed on the terms for how we are splitting the assets and the debts. And the divorce action has already been filed with the Court, and we have already signed our agreements. Good for you to have worked this out, but just because you and your spouse have worked this out doesn’t mean that you can waltz right into Bankruptcy Court and expect that the Court is going to agree with what you did. In limited, but significant cases, they can take what you did with your assets and debts and turn the agreement on its ear. That is, if agreements have ears.

Just because you and your spouse have agreed on how to divide the bills doesn’t mean that your creditors, those to whom you owe money, have agreed or will agree. In fact, they don’t particularly care what you have agreed to. They will continue to hold responsible for the bills the person who is named on the debt in their records.

So, if you’re thinking about your bills and maybe a separation or divorce, this would be a good time to contact Steidl & Steinberg by email or phone.

Bankruptcy – Seven reasons to file

Go ahead, ask someone on the street, or one of your friends, or even one of your enemies,  “Why do you think most people file for bankruptcy?”

You will almost always get the same  answer:  “Because they don’t know how to control their money.”   If only it was that clean and  simple.

The fact is there are dozens of reasons why people file for bankruptcy.  And while overspending is one of those reasons, most of the problems that have befallen my clients are  much more complex and much more sympathetic than “overspending”.  There are lots of  statistics out there that purport to show the exact percentage of those people who file  bankruptcy for this reason or that reason, but with over three decades of doing this type of  work, here are mine:

 

7 Reasons to file for bankruptcy

1. Loss of income

This could be a layoff, a firing, a reduction of hours, a reduction of the  hourly rate, or a medical problem that leads to any of the above.

2. Medical problems

Unexpected diseases or illnesses, leg or back problems, broken or  hurt limbs, medically debilitating mental illnesses, and age.  Some of these lead to Social  Security Disability, and nobody is getting rich on that kind of income.

3. Separation or divorce

It is much more difficult to survive on one income than two in  most cases.

4. Overspending

Yes, of course, but it is not always that simple.  Classical overspending  is certainly responsible for a respectable number of bankruptcy cases. Some people just cannot control their  spending.  But sometimes the overspending is related to the reasons above, such as  when a person loses hours and no longer makes sufficient money to pay on both his or  her fixed monthly expenses, like housing, food, transportation, and the like, plus also  money to pay on the old charges, or student loans, or personal loans.  Or the client was  living with a spouse;  there was enough when both of their incomes were combined, but  now they are living in two separate locations with two housing expenses, and the like.   So when you hear “overspending”, before you judge, listen as to why the overspending  occurred.

5. Death of a spouse

Like separation and divorce, this often leads to a substantial  reduction of income, so often leaving the surviving spouse unable to handle the  remaining bills.

6. Business failure

This could be our client’s business, or someone else’s business that  they were dependent upon.

7. Those darned kids

I wish I had a nickel. . . Look, I get it, I have three kids of my own.   Kids need things, like love, and clothes, and food.  That is not where my clients get into  trouble.  They get into trouble when they co-­sign for cars, and for student loans, and for businesses, and for this, and for that.  And my clients are somehow surprised when their  kids cannot pay the bills and leave it all for their parents.  And then don’t call. Or write. Or pay. So if you think I am trying to tell you something, well, I am.

I think I need to file for bankruptcy. Now what?

As I said at the beginning, there are dozens of reasons why people have to file for  bankruptcy, and everyone has their own story to tell.  We want to hear yours at Steidl and Steinberg.  Sure, you may not be able to pay your bills as they become due, but that does not  mean that you are destined to a life of unrelenting phone calls, nasty letters, and lawsuits.          Call or email us today.  We want to help.

Filing bankruptcy without your spouse

Marriage is a great institution, if you like that kind of thing, and I do.

You never have to worry about looking for a date, for one thing, and it is reassuring having someone there for you at the end of the day.

Add finances to the mix, and things can change. Some couples approach finances as a team, some do not. I have had countless clients say to me: this is my wife’s fault, or this is my husband’s fault, when talking about their difficult state of finances. Add to this situations such as second marriages where one spouse brings in a lot of debt into the marriage while one may not have any concerning debt to think of, and things can get tense.

So it shouldn’t be a surprise when I get calls that say “my husband/wife does not want to be part of any bankruptcy; is that possible?” The answer is: yes.

It is possible for only one spouse to file bankruptcy and the other spouse can cheer them on. The non-filing spouse does not have to be involved at all.

Let’s look at an example: it’s the second marriage for both. Husband was involved in a particularly difficult divorce which left him with lots of debt. Wife has no debt to speak of. Husband can file for a bankruptcy and it should not affect his new loved one. But read on. There are things to look out for. Under the Bankruptcy Code, even though the wife would not be part of the bankruptcy proceeding, the Court does want to know the total income that comes into the household, so the wife would have to provide that income information. And it is possible that the combined household income might mean that a Chapter 7 bankruptcy is out and a Chapter 13 is in.

But unless the husband and wife have some co-signed debt, there should be no other effect on the non-filing spouse.

Whether or not a single-spouse bankruptcy makes sense for you is something we can help with at Steidl and Steinberg. Give us a call and let’s see if it is the answer for you.

Social Security and divorce

It is one of the most popular questions that we get here at Steidl and Steinberg regarding Social Security benefits: Can a divorced spouse collect a former spouse’s Social Security benefits? The answer is, yes, under certain conditions.

You can qualify for Social Security spousal benefits based on your ex-spouse’s work record as long as:

  • The marriage lasted 10 years or more
  • You are 62 years of age, or older, and unmarried
  • You are not entitled to a higher Social Security benefit from your spouse based on your work history
  • Your ex-spouse is eligible to begin receiving his or her own Social Security benefits, even if she has not applied for them yet

There is always concern among clients that the ex-spouse will become angry when you apply for Social Security benefits based on her record. That’s understandable, because there must be a reason why the two of you are no longer married.

But you can assure your ex-spouse that any benefits you receive based on his or her record will not affect what your ex-spouse will receive. There is no money coming out of your ex-spouse’s pocket, so why should there be a problem?

As with married spousal benefits, the amount you receive will be reduced if you apply before you have reached your full retirement age. The age to receive full retirement benefits is currently 66.

Social Security will send a statement once a year to outline what you are eligible to receive when you reach the full retirement age, or if you decide to retire earlier. Keep those statements in a safe place as they will come in handy when you are considering retirement options.