Financial issues are one of the most often cited reasons for disagreements and stress in a marriage. Unfortunately, it is also often the cause for the couple to file for divorce. Divorce can also be a driving factor in why an individual or couple makes the decision to file for bankruptcy. A couple who has made the decision to both divorce and file for bankruptcy may be unsure which legal process they should initiate first. A Rockland County bankruptcy attorney can help.

Filing for Bankruptcy Before Divorce

Last year, more than 650,000 individuals filed for bankruptcy. That was about a 10 percent decrease from the prior year. However, it is estimated that the number of filings will spike dramatically over the coming months as financial protections and assistance programs put in place due to the COVID-19 pandemic are lifted. Many people may find that filing for bankruptcy is their only option for relief and to obtain a fresh start.

A Chapter 7 bankruptcy basically eliminates the majority of a person’s debt. Chapter 13 bankruptcy provides an affordable payment plan for the individual to pay back their debt within a certain timeframe.

One of the issues that must be addressed in a divorce that can become complex is the division of assets and property that the couple has acquired during the marriage. In New York, divorce law requires an equitable distribution method. This means that each spouse is entitled to an equitable share of the marital estate. Equitable distribution does not necessarily mean a 50/50 division. It does mean that the court will examine a variety of factors and then make a determination of what the fairest way is to divide the assets. These factors can include the spouses’ incomes, the couple’s standard of living while they were married, how each spouse contributed to the marriage, and what each spouse’s future income potential is.

Marital Asset Worth

In order to decide how the marital estate should be distributed in the most accurate and fairest way possible, the court needs to know how much each of the couple’s assets is worth. In some cases, it is easy to obtain that value. For example, the value of a savings account can be determined by obtaining the balance of that account from the bank. Obtaining the value of a vehicle is also fairly easy, as one can simply research the vehicle’s fair market value.

In other cases, the value of an asset may be more difficult to determine due to its uniqueness. It is also possible that the value of the asset shifts fairly often. One example of a uniquely valued asset is the couple’s home. Each home is different, depending on its location, style, upgrades, and upkeep. In order to determine the value of the marital home, the court will usually accept the testimony of someone who specializes in that area, such as an appraiser. An appraiser will investigate an array of factors to determine a property’s value, such as the sales history of other homes in the neighborhood and other homes of similar quality and size.

A new “cooling off” law passed in China has resulted in a more than 70 percent drop in the country’s divorce rate. The new law went into effect January 1 and requires couples who file for divorce to wait 30 days after they submit their application before that application proceeds. During that waiting period, either spouse can withdraw the application, which then requires the couple to reapply once again after the 30 days is up. According to recently released data, only 296,000 divorce applications were received in the first quarter of this year, compared to more than one million applications filed in the final quarter of 2020.

If you are considering filing for divorce in New York, you may be wondering what type of waiting period you may be facing and what other requirements the state has. The following is a brief overview. To learn more information about your specific situation, a Rockland County divorce attorney from our office can help.

Residency Requirements for Filing a New York Divorce

In order to file for a divorce in the state of New York, there are certain residency requirements that a couple must meet. One or more of the following must apply:

Many people think of their home and work lives as being substantially separate. If you own a business, especially one in which your spouse has little to no involvement, it may seem logical that the business would be your own personal property. However, in many cases, New York law considers businesses to be marital property, meaning that a divorce could have major implications for the business’s ownership and continued operation.

Is My Business a Marital Asset?

New York law has a broad definition of marital property that includes almost all assets acquired by either spouse throughout the course of a marriage. Importantly, the law specifies that this is true “regardless of the form in which title is held,” meaning that if you acquired or started a business during your marriage, it could be considered marital property even if your spouse is not named as a partner or joint owner.

However, a business will be considered your own separate property if you owned it prior to your marriage, or if you acquired it during your marriage through a gift or inheritance, or in exchange for other separate property. A prenuptial or postnuptial agreement with your spouse could also specify that your business is to be treated as separate property. However, if a business increases in value during the marriage because of contributions from your spouse, at least part of the business could become marital property under New York law.

Considering that financial stress is often a contributing cause of divorce and that the divorce process also often results in financial losses for both spouses, it is understandable that you may find yourself at risk of foreclosure on your home before, during, or after your divorce. Foreclosure can be difficult to deal with under any circumstances, but when connected with divorce, it is further complicated by questions of ownership of the home. An attorney who has experience with both divorce and foreclosure proceedings can help you decide how best to proceed.

A Home Can Be a Marital Asset and a Marital Debt

According to New York law, the term “marital property” applies to most assets and debts acquired by either spouse during marriage, and when a marriage ends in divorce, this property must be distributed equitably between the two spouses. A couple’s home frequently qualifies as marital property, especially if both spouses are named in the purchase agreement. In such cases, the divorce will need to resolve not only how equity in the home will be allocated, but also how any remaining mortgage debt will be allocated.