If you find yourself in the midst of a divorce and are contemplating filing for bankruptcy in Virginia, it is crucial to be well-informed about how these two legal processes intersect. Navigating both divorce and bankruptcy can be a complex and overwhelming experience. In this article, we aim to provide you with comprehensive information about Virginia divorce and bankruptcy laws to empower you to make informed decisions and safeguard your assets.
Virginia Divorce Laws
Before delving further into bankruptcy, it is essential to grasp the fundamentals of Virginia divorce laws. In Virginia, divorces can be granted on two grounds: fault-based and no-fault. Fault-based grounds encompass acts such as adultery, cruelty, desertion, and felony convictions. Alternatively, a no-fault divorce can be obtained if a couple has lived apart without cohabitation for at least one year (or six months with a separation agreement in place, and no minor children involved).
Property Division in Virginia
Virginia adheres to the principle of equitable distribution, which means that property is divided fairly but not necessarily equally during a divorce. When determining equitable distribution, Virginia courts consider various factors, including the length of the marriage, the age and health of the parties, their financial and non-financial contributions to the marriage, and other relevant aspects. Marital property, acquired during the marriage, is subject to division, while separate property, acquired before the marriage or through gift or inheritance, is not.
Bankruptcy Laws in Virginia
Bankruptcy is a legal process that provides individuals or businesses with the opportunity to discharge or reorganize their debts. In Virginia, bankruptcy cases are filed in federal court, either under the jurisdiction of the U.S. Bankruptcy Court for the Eastern District of Virginia or the U.S. Bankruptcy Court for the Western District of Virginia.
Chapter 7 Bankruptcy in Virginia
Among individuals in Virginia, Chapter 7 bankruptcy is the most common type. It involves liquidating assets to pay off creditors, ultimately leading to the discharge (elimination) of remaining debts. To qualify for Chapter 7 bankruptcy in Virginia, you must pass a means test that compares your household income to the state median income. If your income falls below the median, you meet the criteria for Chapter 7. Should your income exceed the median, you may still be eligible based on your expenses and other relevant factors.
Chapter 13 Bankruptcy in Virginia
Chapter 13 bankruptcy is a debt reorganization process that allows you to repay some or all of your debts over a three to five-year period. Unlike Chapter 7, Chapter 13 does not require the sale of assets. However, a steady income is necessary to fulfill the debt payments. To qualify for Chapter 13 bankruptcy in Virginia, your unsecured debts (credit card debt, medical bills, etc.) must amount to less than $419,275, and your secured debts (mortgages, car loans, etc.) must be below $1,257,850.
Divorce and Bankruptcy in Virginia
Divorce and bankruptcy frequently intertwine because financial issues can significantly contribute to the breakdown of a marriage. If you are contemplating bankruptcy during a divorce, it is imperative to consider these important factors.
Bankruptcy Before Divorce
Opting for bankruptcy prior to filing for divorce in Virginia carries both advantages and disadvantages. Filing for bankruptcy can eliminate joint debts and facilitate the division of assets during the divorce process. However, if you choose to file for bankruptcy before divorcing, you must wait until the bankruptcy case concludes before initiating divorce proceedings, potentially causing significant delays.
Bankruptcy During Divorce
Filing for bankruptcy while going through a divorce in Virginia can introduce complexities and necessitate additional legal expenses. Bankruptcy triggers an automatic stay on all collection actions, including divorce proceedings. Therefore, you may need permission from the court to continue with the divorce process. Furthermore, the involvement of the bankruptcy court in property division and asset valuation can impact the outcome of the divorce.
Bankruptcy After Divorce
Delaying bankruptcy until after your divorce is finalized in Virginia may allow you to protect assets awarded to you in the divorce settlement. However, it is essential to note that filing for bankruptcy post-divorce may not discharge any obligations you have in terms of spousal support or child support payments.
Conclusion
Divorce and bankruptcy are intricate legal processes that can be overwhelming to navigate independently. If you are contemplating divorce and bankruptcy in Virginia, it is crucial to seek guidance from an experienced attorney who can offer valuable insight and safeguard your interests. By familiarizing yourself with Virginia divorce and bankruptcy laws, you can confidently make well-informed decisions regarding your financial future.