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Debtors may need to wait before filing for bankruptcy

A person who files for Chapter 7 bankruptcy will need to liquidate all nonexempt assets and use the money raised to pay creditors. Typically, a liquidation bankruptcy case in California is completed in about four to six months. Those who wish to file a Chapter 7 case may need to pass a means test, which compares their income to the median in the state. In some cases, individuals will need to wait to file their cases.

A person who wants to file a new Chapter 7 case must wait at least eight years from the date of a previous filing. Individuals who have filed for Chapter 13 bankruptcy in the past must wait six years from the date a case is discharged to file for Chapter 7 protection. Upon seeking Chapter 7 protection, a debtor must wait four years before it can be converted in a Chapter 13 case.

Chapter 7 and Chapter 13 personal bankruptcies

The bankruptcy code provides two debt relief options to California residents who are struggling to cope with unmanageable financial situations. Chapter 7 bankruptcies are often referred to as liquidation bankruptcies while Chapter 13 petitions are commonly called reorganization plans, and debtors choose between these options based on the amount of money they earn and the kind of assets they hold.

Individuals hoping to file a Chapter 7 personal bankruptcy must first pass a means test. Those who earn less than the median income in their state for a household of the same size pass the test automatically. Those who earn more but cannot cover at least a portion of their unsecured debts after paying allowed monthly expenses may also be able to file a Chapter 7 petition. A Chapter 7 bankruptcy wipes out unsecured debts and the process generally takes between three and six months, and the exemptions in place allow Chapter 7 filers to keep certain assets such as their automobiles and tools they use to earn a living.

How a prenup may help business owners in divorce

Business owners in California may want to consider a prenuptial agreement to protect their company. A prenup can establish the value of the business at the time of the marriage to help ensure that only value gained during the marriage is subject to division in case of a divorce.

However, the prenup can determine how the business is divided as well. For example, if the spouse works for the company but is paid at market rates, that spouse may have less claim to a share of the business. If one spouse will stay home and raise the children, couples may want to consider how this contribution will be valued. Another consideration for the prenup is how the business will be valued. Valuation by a third party can be expensive, disruptive and time-consuming, and agreeing on a way to assess what the company is worth in some other manner could help prevent this.

Divorce over 50 takes a big toll on finances

It's not uncommon today for older California couples to end a marriage. The divorce rate for Americans 50 and over has doubled since 1990. Amazon founder Jeff Bezos, who is over 50, came through his divorce relatively unscathed financially. Other individuals, however, may not be so lucky, regardless of what kind of assets are involved.

Previous pstudies on what's termed gray divorce show that splitting later in life may contribute to high blood pressure, depression, and other health-related issues. The financial fallout can be just as problematic. According to research based on a survey of 20,000 Americans born before 1960, wealth is pretty much cut in half for divorced individuals 50 and over. Older women, in particular, tend to take a hard hit financially when the knot is untied. Gray-divorced women 63-plus have a poverty rate of nearly 30 percent. For men within the same age group this figure is just over 11 percent.

Can Chapter 7 bankruptcy get rid of your debt?

If you struggle with debt, you may not know where to turn. Sometimes, budgeting and negotiating with your creditors does not work out. As your bills pile up and your credit score tanks, you may need to think about declaring bankruptcy. Bankruptcy is an effective debt-relief method for many consumers like you who face overwhelming debt. 

But there are plenty of factors to consider before rushing into bankruptcy, including what kind of debt you want to eliminate. Here are some common types of debt you typically can and cannot discharge through Chapter 7 bankruptcy.

Post-divorce care for children

Parents in California who get a divorce should make every effort to make the process as easy on their children as they can. It is also important that they take action to protect their children after the divorce is finalized.

Children should not be subjected to one parent's anger for the other parent. The kids should be able to exist in an environment in which they do not have to listen to their parents disparage each other. There are no benefits to gained from the children having to listen to how their parents were unfaithful, engaged in unwise behaviors or started the divorce process.

Reasons to co-parent

Parents in California who decide to go their separate ways may be apprehensive about what raising children with an ex will be like and if it will work. However, a successful co-parenting relationship can yield beneficial results for all parties involved.

Ex-spouses who are in an effective co-parenting relationship are helping their children feel more secure, which can be very important if they were traumatized at the realization that their parents would no longer be together. The children can feel normal and safe once they realize that they still have two parents who care for them.

Talking about child-related expenses after divorce

When California couples get divorced, they will still have to deal with each other occasionally if they have children, especially if their kids are younger or still in school. Even if parents are able to agree on how to share their time with the children, dealing with the financial costs of raising the children can be more difficult. However, there are ways parents can reduce the financial stress.

Ex-spouses should be able to talk about finances together whether it be face to face, over the phone or even by email. People should consider looking into the future when talking about child-related finances, especially as the budget will change as the kids get older. It is usually recommended that parents talk about the budget for their children once a month, though people who have a good relationship after the divorce may wish to talk more often.

Dividing retirement funds during divorce

When people in California decide to divorce, the financial implications can be serious and long-lasting. This is especially true at the end of longer marriages where large assets like retirement funds are divided. As a result, people may have to make significant changes to how they plan for the future. There are some key points that people can keep in mind to help them emerge from the divorce process with a solid plan to prepare for the future.

In some cases, people may negotiate the distribution of their retirement plans as part of the property division process. This is especially true when both spouses work and maintain retirement funds through their jobs. Both people may simply agree to keep their own retirement funds. However, this is much more complex when one person was the main retirement saver or if one spouse was a stay-at-home parent. Like other types of property, retirement funds that existed before the marriage are generally not eligible for division, but the additional money saved during that time is considered part of the marital property. This means that the retirement impact can be relatively small after a short marriage and large after a lengthy one.

A look at student loan debt and the divorce process

A divorce in California involves the division of the spouses' marital assets and debts. Although the state views marital assets as community property that should be divided equally upon the dissolution of marriage, family law carves out some special rules for student loan debt.

Student loans taken out by individuals prior to tying the knot could likely remain the responsibility of the borrower after the divorce. As for student loan debt acquired during a marriage, the state typically assigns it to the person who received the loan. This represents an exception to how family law typically divides other marital debts between both people. A spouse who co-signed on a student loan from a private lender for the other spouse, however, will likely remain responsible for the debt regardless of the terms of the divorce.

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