It sometimes happens that a married couple who arranged a chapter 13 debt repayment program with a bankruptcy lawyer in Arlington, TX eventually decides to get divorced. If they are still in this program, the situation becomes complicated. Legally, the two individuals are considered to have a financial conflict of interest after a divorce. They can no longer make the payments as a married couple and must decide how to proceed.
Staying Married Temporarily
Chapter 13 programs can last up to five years. If there is less than a year left on the repayment program, the couple might give careful consideration to staying married until all the payments are made. However, this may feel unacceptable when someone wants to move on with their life in a new direction.
Proceeding with Divorce
The original bankruptcy lawyer in Arlington, TX can continue to represent one of the clients after a divorce filing, but the other must hire a different lawyer. Otherwise, there would be an additional legal conflict of interest.
This kind of scenario happens more often than someone might think. Financial difficulties are a major cause of marital stress and can eventually lead to a split. An organization such as the Law Firm of David S. Kohm can assist by providing representation for the spouse who needs to find a new attorney in the bankruptcy program.
Possible Solutions
The two individuals might arrange to contribute equal amounts each month to the repayment plan, or they might arrange their respective amounts relative to how much income each of them brings in. The agreement should be documented in the divorce filing.
The court may allow a modification of the original repayment plan because of this new development. That would allow for lower payments if the divorce is causing further financial hardship.
Another option would be to ask the court to divide the chapter 13 filing so each person is responsible for their own debt repayment arrangements. This can be the most advantageous solution if the divorce is acrimonious. It is also a welcome option if the ex-spouses don’t like being tied financially to each other this way.
