Debt is an issue that affects people throughout the United States, and there are many reasons that a person may struggle to repay the debts he or she owes. For example, a person may experience financial difficulties due to being laid off from his or her job, or a family member may suffer from a serious illness that leads to unexpected medical expenses. While most people will do everything they can to make ongoing payments toward their debts, this can sometimes become impossible. If a person misses payments or defaults on a loan, creditors may begin taking action to collect the amounts that are owed. 

People in these situations may be considering bankruptcy, which will allow them to eliminate certain types of debts and regain financial stability. In many cases, a person will pursue a Chapter 7 bankruptcy, since this will allow debts to be discharged fairly quickly. However, this type of bankruptcy may require a person to turn over certain assets that he or she owns. Those who are considering this option will need to understand what types of assets may be liquidated during bankruptcy and what exemptions may apply.

Marriages can break down for many reasons. In some situations, a spouse may wish to get a divorce because of issues such as infidelity or abuse. The spouse may believe that ending the marriage would be best for everyone involved. However, there are many cases where a couple may be experiencing relationship issues because of disagreements about how their children should be raised, arguments about financial matters, or simply because they feel that they are no longer compatible. If a couple is unsure about whether divorce is the best choice, or if they wish to remain married for other reasons, legal separation may be a better option. This may allow a couple to take steps on the road to divorce while they determine whether their relationship can be repaired, or it may work as a more permanent solution that provides benefits for both parties.

Reasons to Choose a Legal Separation

Divorce will legally terminate a couple’s marriage. Some couples who are experiencing relationship issues may not be sure about whether they are ready to take this final, irrevocable step. By pursuing a legal separation, a couple may begin the divorce process and make some decisions about how matters will be handled while they are separated, and they will have the option to reconcile in the future. Legal separation may also be an option for couples who do not wish to get divorced due to religious or cultural reasons. It may also allow spouses to maintain certain benefits of being legally married, such as ensuring that one spouse will receive health insurance or other benefits through the other spouse.

A legal separation is handled in a similar manner as a divorce, and a couple will need to address many of the same issues that they would need to resolve when dissolving their marriage. These may include decisions about how child custody will be handled while parents are living apart, including how they will make decisions about their children and the amount of time children will spend with each parent. 

Homeowners who have encountered financial difficulties may struggle to pay their ongoing expenses, including mortgage payments. Those who have defaulted on their mortgage after missing one or more payments may have been contacted by their bank, or they may have been notified that a foreclosure will occur if they do not make up the missed payments. In some cases, bankruptcy may be the best way to respond to a foreclosure notice. Bankruptcy may provide a homeowner with options to address outstanding debts and ensure that he or she will continue making mortgage payments. However, loan modifications may be another option that will allow a homeowner to make up missed payments and to continue making affordable payments in the future.

Mortgage Loan Modifications

The terms of a mortgage are not set in stone, and a bank or lender may agree to update these terms. In fact, it is often in a lender’s best interests to do so, since the foreclosure process is likely to result in financial losses, and lenders will often prefer to make arrangements that will allow them to continue receiving regular payments. 

Homeowners may have multiple options for modifying a mortgage loan in a way that will reduce their payments to an amount that they will be able to afford. These options include:

If you have chosen to get a divorce, you will need to address multiple types of financial issues, as well as the legal matters involved in dissolving your marriage. The process of property division can often become complicated, especially if you and your spouse own multiple and different types of property and assets. Retirement benefits are an issue that sometimes can complicate this process, and determining how to divide these assets correctly can ensure that you will have the financial resources you need later in life.

Retirement Accounts, Pensions, and QDROs

Generally, any retirement benefits you or your spouse earned or contributed to during your marriage are part of the marital estate. They will need to be divided alongside your other marital property. These benefits may include retirement accounts provided by an employer, such as a 401(k), or an individual retirement account (IRA), as well as pension benefits earned while you were married.

In many cases, a spouse will be able to keep retirement accounts that are in his or her own name. However, the funds in these accounts may be divided by withdrawing or transferring some of the balance. It is important to understand that if you choose to withdraw funds from a retirement account before reaching the age of 59 ½, penalties may apply, and taxes also must be paid on the amounts that are withdrawn or transferred.

Anyone can encounter unexpected financial problems that can put him and his family in a difficult position. This has been especially true during the COVID-19 pandemic, which has caused millions of people throughout the United States to lose their jobs or suffer health-related setbacks that have affected their income or resulted in large debts. A family that has struggled to pay ongoing expenses may be concerned that it may face foreclosure if they default on their mortgage. Fortunately, homeowners may be able to receive relief through Chapter 13 bankruptcy. By filing for bankruptcy, homeowners may eliminate certain types of debts and avoid losing their homes.

Addressing a Mortgage During a Chapter 13 Bankruptcy

First, filing for bankruptcy will place an automatic stay on any collections by creditors. This will put a halt to foreclosure proceedings that have been initiated by a lender, giving a debtor the necessary breathing room to determine his options. He can then determine what types of debts will be included in his bankruptcy and create arrangements that will allow them to maintain ownership of his home.

During the process of Chapter 13 bankruptcy, a repayment plan will be set up in which a person will pay back some of his debts throughout a period of either three or five years. Once the debtor makes all required payments, he will no longer be required to repay the balance of any unsecured debts that were included in the plan. In addition, any creditor who failed to file notice of its claim will not be required to be paid at all.