Kentucky Bankruptcy Law

Counsel with Care

The Debt / Divorce Correlation

Common thought has long been that severe financial stress leads to divorce. Such ideas, when repeated often enough, are accepted as truth without much scrutiny. However, research exists to refute this conclusion (here is one example from 2006 though it focuses on only one culture). I suspect the answer is, as Suzy Brown (Director of Midlife Divorce Recovery Bootcamp) suggests, difficult financial situations bring some couples to renew their efforts to make their marriage work while pushing others over the edge to divorce and I doubt a strong correlation between debt and divorce would be found in the United States population.

What does appear clear is that mounting debt and dire economic circumstances lead to increased stress for many folks. Finances then become a source of marital strife. For those whom such strife pushes toward divorce, I find it troubling that they would think of dissolving their marriage long before contemplating eradicating their debt.

Somehow in our society it has become more acceptable to sever the marriage ties while it remains unthinkable to file for bankruptcy and release the weight of debt. And yet, bankruptcy very well could be the thing that relieves enough stress for those looking to divorce as a solution to back up and give their marriage another chance. It often appears to be either an issue of pride where they created the debt thus they will be responsible for repaying it come hell or high water. Logically then, those same sentiments of honoring a contract should apply even more to the contract of marriage which is usually a covenant ratified before God.

To be clear, I do respect people who desire to be responsible for the debts they created. However there are circumstances when the fresh start that bankruptcy can offer is the best course to pursue. The bankrupcty code (specifically Chapter 7 and Chapter 13) is meant to provide a safety valve for individuals who, by honest mistake or life circumstances, got into debt beyond what they can reasonably manage.

In essence, it is legislative grace that not only helps those individuals but greases the gears of our economy on the larger scale. Our modern day bankruptcy code can be traced to God’s original notions of bankruptcy. That’s right, God designed a bankruptcy code long ago and it can be found in Deuteronomy (begin your review in Chapter 15). In contrast to the year of jubilee and that system of debt relief, Holy Scripture offers only narrow circumstances where divorce is condoned.

So, I urge those folks who are experiencing marital strife including over mounting debt to go talk to someone who knows bankruptcy law and see if you could qualify for relief through a Chapter 7 or 13. If so, that may give you enough relief from the economic tension to focus on strengthening your marriage.

You can find practitioners who are versed in both family law and bankruptcy for an even fuller picture of your options and the consequences of each. I, for one, would far rather represent a couple in a bankruptcy so they can enjoy a real fresh start financially than represent that same couple in a divorce.

February 22, 2013 Posted by | Bankruptcy, Divorce, Family Law | , , , , , , | 4 Comments

Learning to live lean

Bankruptcy is certainly an option when one lands in a bad spot due to unexpected life events. In fact, it is better for society for such a person to use the bankruptcy system to get a fresh start and become a productive citizen again relatively quickly rather than be dragged through a series of disheartening collection actions. However, bankruptcy does not really help those persons who do not learn from their economic woes how to live leaner. A tiny minority of people used Chapter 7s followed immediately by Chapter 13s and then began that process again as soon as possible to basically live off of credit for as long as possible. This tiny number of persons lead to reforms in the bankruptcy code that kept one from filing a Chapter 13 until four years after filing a Chapter 7 and prevented a repeat Chapter 7 for eight years. It also lead many to feel ashamed or embarrassed to file bankruptcy. For those who make no changes in their spending practices, the fresh start of bankruptcy will be short lived and they may end up in worse shape because of the timing limits for filing again.

It is those persons who feel embarrassed that I most want to help, because they are likely to learn to live lean to avoid ever being in that predicament again. They are the people who call and are most concerned about whether their name will be in the paper. They want to live within their means, but the costs of living crept up on them or some crisis precipitated unmanageable debt. For them, they can start living within their means if only that can break out of the bondage of overwhelming debt first.

One example of living lean is described in this post about cable television bundled with phone and other services: “Personal Soap Box”. While the post indirectly refers to cutting costs, it is helpful in explaining one way that a deal that sounds cost saving in the beginning can end up costing more in the long run. It also indirectly reminds us that cable television is not a necessity of life; cable TV is a luxury, not a utility like we have been trained to believe.

Bankruptcy is not something to be embarrassed about for basically responsible adults. The numbers of those who will be filing bankruptcy is going to grow larger and larger over the next year and most of those people are folks who wish to honor the debts they incur (as I pointed out in this post, the Jubilee system was a precursor of modern bankruptcy). Bankruptcy is merely the most efficient way for society to address overwhelming debts and keep such people as productive members who can continue to be consumers of goods and services, thus keeping the economy rolling along. But, especially in today’s economy, we must all be determined to live leaner and, if necessary, allow the bankruptcy system be our teacher.

January 17, 2009 Posted by | Bankruptcy | , , , , , , , | 2 Comments