Can I File Bankruptcy While a Civil Lawsuit Is Filed in Orlando for Pending Divorce Settlements?

Let’s Break Down How it Could Affect Your Divorce and Financial Future.

Going through a divorce can be stressful, and sometimes it leads to financial problems. If you live in Orlando and are in the middle of a divorce, you might wonder, Can I file for bankruptcy while a civil lawsuit is filed? Let’s break this down and see how this affects you.

Quick Summary:

  • You can file for bankruptcy while going through a civil lawsuit, including a divorce. However, it’s important to understand how this might affect your case, especially in Orlando, Florida.
  • While bankruptcy can erase many debts, obligations like child support and alimony are not wiped out. These remain your responsibility, even if you file for bankruptcy.
  • Filing for bankruptcy triggers an automatic stay, which halts most legal actions against you. However, this does not stop divorce proceedings or the requirement to pay spousal and child support.

What Is Bankruptcy?

Bankruptcy is a way for people who have a lot of debt to get help and either erase or pay off some of that debt. In Orlando, just like the rest of Florida, people can file for bankruptcy under federal law. It’s like pressing the reset button on your finances. When you file for bankruptcy, the court looks at what you owe and helps you manage it. There are different types of bankruptcy, but most people who have a lot of debt choose between Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often called “liquidation bankruptcy,” allows people to get rid of most or all of their debts. It’s like wiping the slate clean. Chapter 7 can help you erase debts like credit card balances, medical bills, personal loans, and utility bills. Once these debts are erased, you’re no longer responsible for paying them. But not all debts can be wiped away with Chapter 7. For example, child support, alimony and certain taxes usually remain, meaning you still have to pay them even after bankruptcy.

Chapter 13 Bankruptcy: Creating a Plan to Repay Your Debts

Chapter 13 bankruptcy is different from Chapter 7 because instead of erasing your debts, it helps you create a plan to pay them off over time. It’s often called a “reorganization bankruptcy” because it reorganizes your debts into more manageable payments. This is often a good choice if you have a steady income but need help managing large debts or catching up on overdue payments, especially if you want to keep important assets like your home or car.

Can You File for Bankruptcy During a Divorce Lawsuit?

The answer is yes, you can file for bankruptcy even if you’re in the middle of a civil lawsuit, such as a divorce, in Orlando. However, it’s essential to understand how this can affect your case. When you file for bankruptcy, something called an automatic stay usually happens. This means most lawsuits and creditor actions stop temporarily. It can give you relief from things like debt collection or home foreclosure.

But, divorce cases are different. Certain parts of the divorce, like child support and alimony (spousal support), won’t be stopped by the bankruptcy filing. These payments are important to keep families supported, so the law says they must continue, even during bankruptcy. So, while bankruptcy might help with other debts, your divorce will still go on, and you’ll still be responsible for those support payments.

How Does Bankruptcy Affect Divorce Settlements?

When you’re going through a divorce, things like spousal support (alimony) or child support might be part of the settlement. Filing for bankruptcy can change how certain financial issues are handled, but not all.

For example, if you’re wondering, “Can I get rid of alimony or child support by filing for bankruptcy?” the answer is no. These types of payments cannot be erased through bankruptcy because the law makes sure that these payments continue to support families and children. However, other debts like credit cards, medical bills, or personal loans can be handled through bankruptcy.

The Automatic Stay in Bankruptcy

One thing that happens when you file for bankruptcy is something called an automatic stay. This is a rule that stops most legal actions, like lawsuits or debt collection, from continuing while the bankruptcy is being processed. But, there are exceptions. Even though the automatic stay can stop creditors from collecting money, it does not stop divorce cases or the responsibility to pay child or spousal support.

So, if you’re in the middle of a divorce in Orlando, and you file for bankruptcy, the divorce proceedings will still move forward.

When Should You File for Bankruptcy During a Divorce?

Deciding when to file for bankruptcy depends on your situation. If your debts are unmanageable, filing before your divorce could make things easier because you would have fewer debts to split during the divorce process. On the other hand, if you file for bankruptcy after your divorce is finalized, you’ll have to manage both the divorce settlement and the bankruptcy process separately.

Special Laws in Florida and Orlando

Bankruptcy laws are federal, but every state has specific rules. In Florida, there are exemptions (things you get to keep when filing for bankruptcy) that protect your home, certain personal items, and even your car, depending on its value. These are called Florida’s bankruptcy exemptions. For example:

  • Homestead Exemption: If you own your home in Florida and have no mortgage, you can keep your home, no matter how much it’s worth. But, you must have owned it for at least 1,215 days before filing for bankruptcy. If not, federal rules apply.
  • Personal Property Exemption: You can keep up to $1,000 worth of personal items like furniture and clothes. If you don’t use the homestead exemption, you can keep up to $4,000 worth of items.
  • Motor Vehicle Exemption: You can keep up to $1,000 of your car’s value, though this may not be enough to keep the car unless other arrangements are made.
  • Wage Exemption: If you’re the head of the household, you can keep up to $750 per week of your wages. Other family members can protect up to 75% of their wages.
  • Alimony and Child Support Exemption: Payments for child support and alimony are protected if needed for support.
  • Wildcard Exemption: If you don’t use the homestead exemption, you can protect up to $4,000 of any personal property (or $8,000 if filing with a spouse).
  • Damage Award Exemption: If you were injured at a dangerous job, the compensation is protected. Other lawsuit awards are not.

These exemptions can help make sure you aren’t left with nothing after filing for bankruptcy. It’s a good idea to talk to a bankruptcy attorney in Orlando who knows these rules to make sure you understand your options.

Can I File Bankruptcy While a Civil Lawsuit Is Filed in Orlando? Why You Should Talk to a Lawyer

Absolutely! Bankruptcy and divorce are tough and can get confusing fast, especially with the different rules in Orlando and Florida. If you’re wondering, can I file bankruptcy while a civil lawsuit is filed in Orlando?,  it’s important to get the right legal advice. At Tejes Law, we understand the local laws and can help you figure out if filing for bankruptcy during your divorce is the best option for you.

We’ll guide you through every step, making sure you don’t accidentally make a decision that could cost you more money or cause problems later. Our goal is to make the process smoother and less stressful for you. So if you’re feeling overwhelmed, don’t hesitate to reach out to us at Tejes Law — we’re here to help clients in Orlando, Florida, navigate these complicated situations. 

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