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Take care of finances before divorce in California

When divorce proceedings and financial troubles go hand-in-hand, it can be difficult for some California residents to decide which to take care of first. However, in a recent piece on the subject, a financial adviser suggests taking care of as many financial problems as possible before moving forward with the dissolution of a marriage because bankruptcy can carry certain consequences if it is undertaken during or after a divorce.

One of the main complications with filing for bankruptcy during a separation is that the cooperation of both parties is needed. When one spouse does not care about his or her credit, as in the case of an unpaid mortgage and home foreclosure, while the other is trying to move forward, tensions can interfere with the divorce proceedings. If this is the case, the Bankrate advisor suggests taking a few necessary steps.

First, look into which party will be ultimately liable for the mortgage on any homes owned after a bankruptcy filing. In some states, it is not necessary to declare bankruptcy in order to avoid foreclosure due to anti-deficiency laws, which prohibit the previous owner from being liable for any monetary difference between the home's sale price and remaining balance owed.

Once all of the legalities are confirmed and bankruptcy is filed, it is time to file for divorce. A California family law attorney may verify that no agreement is made to pay any debts jointly since bankruptcy has cleared previous debt from the filer's record. The final step is to sell the property in a short sale to avoid foreclosure, which requires the consent of the soon-to-be ex-spouse. An attorney may advise individuals regarding bankruptcy and divorce along with the appropriate measures to take in order to protect their assets and credit during the process.

Source: Fox Business, "Which Should I File First: Divorce or Bankruptcy?", Justin Harelik, July 10, 2013

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Victoria S. Linder Law Office
5303 Folsom Boulevard
Sacramento, CA 95819

Phone: 916-905-4805
Fax: 916-498-0127
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