How is it possible that people go bankrupt during divorce in the USA? Isn’t it a 50/50 split?
It’s not “the divorce” that causes people to go bankrupt, it’s the financial strain that a divorce case either causes or exacerbates.
Here are the top three reasons why divorce and bankruptcy so often go hand in hand:
- People can literally go bankrupt by incurring debt for legal fees. Contested divorces can easily cost $50,000 and only go up and up from there. Few people have that much discretionary spending money, so they go into debt to finance their divorce case and then find themselves unable to pay the creditors, so they file for bankruptcy.
Many people are insolvent or near-insolvent before they or their spouses file for divorce, and so:
- some people don’t file for bankruptcy because they don’t want their family to suffer the effects of bankruptcy, but if their spouses file for divorce and break up the family, then the reason/motivation to put off filing for bankruptcy no longer exists.
- for other people the financial support from their spouses are the only thing that keeps bankruptcy at bay. Once their spouses are out of the financial picture, they can’t put off bankruptcy any longer.
Utah Family Law, LC | divorceutah.com | 801-466-9277