When Colorado residents go through a divorce, it can be a very stressful and emotional time. On top of these emotions, ex-spouses may be left with significant financial challenges and high personal debt.
For these individuals, filing for Chapter 7 bankruptcy may be an option. Recently, this is what actress Kelly Rutherford did after her divorce reportedly left her with $2 million of debt. Rutherford, like many spouses, was forced to incur significant legal fees to divorce her ex-husband and battle for the custody rights to the couple's two children. The actress also had a past tax bill and credit card debt, as well as loans from friends.
While divorce can cost a lot of money, it can also be difficult for individuals after a divorce to adjust to living on a single income. The loss of income may mean individuals cannot afford the lifestyle and assets they once owned during marriage.
Fortunately, when a person gets deep in debt after a divorce, Chapter 7 may be an option. By being released from personal liability for most debts, individuals can get back on their feet again and start their finances fresh, at the same time they are starting a newly single lifestyle. Certain debts like alimony and child support that are often at issue in a divorce are not dischargeable in bankruptcy, but other unsecured debt may be discharged.
Accordingly, while a divorce may be trying for individuals to go through, it can often lead to other challenges. When this happens, individuals should consult with a bankruptcy attorney to see what their options are, and whether bankruptcy can help them become debt free.
Source: Daily News, "Kelly Rutherford files for bankruptcy after costly divorce, custody battle," Zayda Rivera, Jun. 24, 2013