There are several different personal circumstances that have a strong association with bankruptcy. Major illnesses and job losses can push people into financial insolvency. Divorce is another common experience that can leave people in need of financial relief.
Those who recently divorced may sometimes benefit from a bankruptcy filing as a means of truly getting the fresh start they deserve. Why does divorce sometimes trigger financial insolvency?
Insurmountable expenses
Divorce can be an incredibly costly process. Especially in cases where there are high levels of conflict and spouses must litigate, the expenses associated with divorce can strain an individual’s budget. They may pay tens of thousands of dollars in legal fees and court costs. Those with major outstanding divorce expenses sometimes need to consider bankruptcy as a means of securing a fresh start.
Unsustainable standard of living expectations
People generally acclimate to a certain standard of living during a marriage. That can be as true for minor children in the family as it is for the spouses who divorce. Trying to maintain a certain lifestyle for oneself or for children after a divorce can lead to slowly accumulating debt. People may use credit cards and other credit-based solutions to maintain a lifestyle that they can no longer afford.
Support issues
Sometimes, one divorced spouse receives regular financial support from the other in the form of spousal maintenance after a divorce. If the couple has children together, one parent may have to pay child support to the other to help maintain a baseline standard of living for the children. Unfortunately, the party ordered to pay support may not do so on time or in full as they should. The recipient spouse may then end up struggling financially because they still have expenses accruing but no incoming support to cover those costs. Creditors generally do not care that someone else has a support order in place. They may try to take legal action against the recipient who has not received the financial support the courts ordered.
Recognizing that certain divorce situations increase the likelihood of financial challenges could help people feel more comfortable with the idea of personal bankruptcy. Bankruptcy can limit creditor actions and help people establish more sustainable budgets.