During a marriage, there may be several issues with how the family income is spent. A well-paired set of partners consists of two people who can evenly disperse the money responsibly, but more often than not there is a partner who spends rather foolishly while the other partner is more conservative. It is one of the biggest reasons couples fight and eventually divorce. If you are the partner that wanted to act and behave responsibly with money but now find yourself floundering under insurmountable tax debt that should not be yours, you can claim "impoverished spouse" to get relief. As for the rest of the debt you now bear, your impoverished spouse status can actually help your bankruptcy case in several ways.
Presenting Your Impoverished Spouse Status to Your Creditors
It is unfortunate, but most states will split marital debt after a divorce, even if you did not create or agree to anything for which your former spouse went into debt. The government will wipe away your tax debt if you can prove your ex's financial irresponsibility through receipts, gambling stubs and earnings, bank statements and credit card statements. Once you have obtained that status at the government level, your bankruptcy attorney can argue that the rest of your debt is also not your fault and should be eliminated or reassigned.
Proving Your Debt Load to Income Ratio
If you were not the primary bread winner in your marriage, or you did not work outside the home at all, you can show your creditors that your debt load to income ratio is beyond anything you could ever be expected to repay. Your bankruptcy attorney can provide your creditors with the necessary calculations, in conjunction with your impoverished spouse status from the IRS, and save you a lot of trouble from a few creditors which might still wish to pursue you for the money owed. It is the legal way of saying, "Look! I did not make this mess, and I cannot manage to pay it back!"
Moving "Your" Debt Share Over to Your Ex
When the IRS grants you impoverished spouse status they are removing the tax responsibility from you and placing it onto your ex. The same can be done with the debt share that divorce court dropped on you. When your lawyer shows your creditors all the proof regarding the divorce, the impoverished spouse status and how "your" debt share is unjust, your creditors' lawyers can remove the debt from you and have it legally placed on your ex. Just be careful of this decision, because your ex could attempt to revert his or her newly added debt back to you. The proof is absolutely essential in requesting that the full debt load go back to your ex, so provide your bankruptcy attorney with everything he or she requests. You can find a bankruptcy attorney at a firm like Julie A Philipi Attorney at Law.