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Bankruptcy And Getting Divorced In Georgia

Bankruptcy And Getting Divorced In Georgia

Many people are surprised to learn that divorce contributes to a significant percentage of bankruptcies nationwide. In many cases, a married couple makes enough money together to support one household. Once the spouses divorce and the marital debts are divided, there frequently is not enough money to support two.

If you are divorced and in need of debt relief assistance, it is important that you seek the advice of an experienced Georgia bankruptcy attorney who can help you understand your rights and options. At the law firm of Claeys, McElroy-Magruder & Kitchens, we provide sound advice to couples who are considering bankruptcy and getting divorced. In Augusta, Dublin and Statesboro, Georgia, and the surrounding areas, we help our clients navigate the most complex debt relief issues.

Dischargeable And Nondischargeable Debt After A Divorce

If you have already been through a divorce, the most important thing to understand is which debts can and cannot be discharged in a bankruptcy. If you have been ordered to pay child or spousal support, you cannot discharge these debts in a bankruptcy.

If you have been ordered to pay a marital debt such as a credit card in the divorce, it may be possible for the debt to be discharged in a Chapter 13 bankruptcy. It is important to note, however, that the creditor has the right to pursue collection action against your former spouse. If you are struggling to pay a debt that was ordered as part of a divorce settlement, we can review your divorce order and settlement agreement and work to identify the debt relief option that best accommodates your needs.

Filing Jointly Prior To Divorce

In many cases, it can be most beneficial for spouses to file a joint bankruptcy petition prior to the divorce. By doing so, we can help couples eliminate much of the marital debt that would otherwise be divided between the spouses as part of the property settlement. In addition, filing jointly rather than individually can save you money since there is only one filing fee instead of two.

Compassionate Individual Bankruptcy Attorneys With Offices In Augusta, Dublin And Statesboro

We have offices in Augusta, Dublin and Statesboro as well as a mobile office to serve you. Contact our law firm today to discuss your divorce-related bankruptcy questions with a lawyer. We are available during regular business hours and by appointment evenings and weekends.

Call One Of Our Three Convenient Georgia Offices

Contact Us for a free consultation

Augusta: 706-724-6000

Dublin: 478-275-8311

Statesboro: 912-764-7000

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Co-signor for ex-spouse’s student loans discharged in bankruptcy

Co-signor for ex-spouse’s student loans discharged in bankruptcy

In the case of In re Zumbro, the U.S. Eleventh Circuit Court of Appeals ruled that the district court was correct in upholding the bankruptcy court’s order decision determining that student loans co-signed by the debtor were dischargeable in bankruptcy under a hardship exception.

The “Brunner test

Bankruptcy courts apply a three-prong Brunner test for ordering a discharge of student loan debt. The debtor must prove the following:

  • An inability to maintain a minimal standard of living for the debtor and the debtor’s dependents, based on current income and expenses, if required to repay the loans.
  • Additional circumstances showing that this inability is likely to persist for a significant portion of the loan repayment period.
  • Good-faith efforts on the part of the debtor to repay the loans.

Background

During her marriage, the debtor was a co-signor on three promissory notes to obtain loans to help finance her former spouse’s medical education. The former spouse finished medical school and completed his residency, but practiced medicine for only a few years. In 2003, the former spouse surrendered his medical license. The former spouse was later arrested and convicted on criminal charges and has been incarcerated since 2005. The debtor also filed divorce proceedings in 2005. Aside from the student loans, the debtor also incurred large consumer debts during the marriage due to the former spouse’s lavish lifestyle. The debtor’s obligation under two of the promissory notes became fully due in 2006. Her obligation under the third promissory note does not become fully due until 2016.

Procedural history

The debtor filed a petition for bankruptcy relief under Chapter 13 and commenced legal proceedings to obtain a discharge of the student loan debt. The bankruptcy court originally ruled that the student loans were nondischargeable since the debtor had not satisfied her burden of proof regarding the second prong of the Brunner test. The bankruptcy court incorrectly believed that the student loans could be restructured and refinanced under the provisions of certain federal regulations which allow borrowers of certain government-issued student loans to restructure their payment period for up to 30 years.

After the debtor filed a petition for reconsideration, the bankruptcy court reversed its prior ruling. The bankruptcy court held that, because the debtor was only a co-signer, not the actual borrower, and the student loans were not government-issued, the debts were not eligible for an extension of the loan repayment period under federal regulations. The district court reviewed and affirmed the bankruptcy court’s decision and the creditor which had guaranteed the student loans filed an appeal in the Eleventh Circuit.

The Eleventh Circuit’s ruling

On appeal, the Eleventh Circuit upheld the district court’s decision. The circuit court held that the debtor satisfied the undue hardship requirements under the Bruner test. With regard to the second part of the Bruner test, the court found that the debtor’s state of affairs would persist for a significant portion of the repayment period since she was not eligible under federal law for the extended loan repayment period.

Individuals facing bankruptcy proceedings are urged to consult with a competent attorney experienced in these matters to ensure that their legal rights are protected.

Contact Us for a free consultation

Augusta: 706-724-6000

Dublin: 478-275-8311

Statesboro: 912-764-7000

Bankruptcy Myths In Georgia

Bankruptcy Myths In Georgia

Over the years, there has been a large amount of misinformation about bankruptcy that people have grown to believe is true. At the law firm of Claeys, McElroy-Magruder & Kitchens, we provide comprehensive consumer bankruptcy services to clients throughout the Augusta, Dublin and Statesboro areas. Our attorneys have compiled a list of the most common myths that keep people from exploring the benefits that bankruptcy can provide.

The following are among the more common bankruptcy myths in Georgia:

Myth: If you file for bankruptcy, you can never get credit again.

  • The Truth: For many people, conditional credit offers begin arriving in the mail in as little as six months. Once you have established enough of a payment history, you will become eligible for regular credit and, eventually, traditional lending such as home and auto loans.

Myth: You will lose everything you own if you file for bankruptcy.

  • The Truth: In many cases, the opposite is true. While the trustee does have the right to sell non-exempt property in a Chapter 7 bankruptcy to raise money for creditors, he or she usually decides that the amounts owed on secured assets are more than their value.

Myth: After the 2005 laws went into effect, hardly anyone qualifies for bankruptcy.

  • The Truth: In fact, everyone who qualified prior to the change in the law still qualifies today. For some people, there may simply be a few extra steps involved in the process.

Myth: If you need to file for bankruptcy, you must be some kind of deadbeat.

  • The Truth: Absolutely not. Nobody wants to face financial hardship, and nobody wants to file for bankruptcy. Job loss, medical bills, divorce and many other causes have driven even the most financially secure individuals into severe financial difficulty. Oftentimes, filing bankruptcy is the financially responsible thing to do.

Get Honest Answers To Your Questions About Bankruptcy

Contact our law firm today for a free consultation with a lawyer. We have offices in Augusta, Dublin and Statesboro as well as a mobile office to serve you. We are available during regular business hours and by appointment evenings and weekends.

Call One Of Our Three Convenient Georgia Offices

Contact Us for a free consultation

Augusta: 706-724-6000

Dublin: 478-275-8311

Statesboro: 912-764-7000

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.