Financial Consequences of a NJ Divorce from Bed and Board

New Jersey couples who want to separate but not completely divorce have the option of choosing a legal process called divorce from bed and board. This is New Jersey’s version of a legal separation.

Why not just sever all ties and get divorced?

While there are many reasons why a married couple may not be ready to commit to a final divorce (irony noted), for the purpose of our finance-focused blog, we’re going to, as usual, hone in on MONEY.

Most spouses who are interested in a bed and board divorce are generally still amiable and see the benefit of working together to end their marriage in the best financial way possible for both parties.

Health Insurance Benefits

Probably the biggest money-saving reason to consider a divorce from bed and board is so that the dependent spouse can retain health insurance benefits even after the couple separates. Oftentimes, married couples have one insurance policy through one spouse’s employer. A bed and board divorce is especially applicable in cases wherein one spouse was a stay-at-home-parent or was otherwise unemployed in the capacity that would allow them to acquire health insurance of their own.

Private health insurance coverage is expensive. Divorcing couples in New Jersey in which the dependent spouse needs access to healthcare on a regular basis (ie. those dealing with a chronic illness) can choose the limited (b&b) divorce option, allowing the dependent spouse to remain covered under their working spouse’s policy until such time that he or she is able to obtain independent coverage.

Tax benefits

New Jersey homeowners who are joint owners due to marriage may be unsure how they want to divide the marital home. Moving from one household into two is, as you can imagine, enormously expensive.

Some married couples who no longer wish to be married recognize that it is wise for them to temporarily continue owning property together. This may mean that both spouses remain living in the marital home until both parties have a better hold on their independent personal finances. Additionally, continuing joint ownership of the marital home helps couples avoid property tax repercussions because the IRS views a divorce from bed and board as identical to a legal separation.

Retaining joint home ownership also gives couples who want it the time they need to transfer the title from both spouses to one spouse. This is because there are generally no time limits on property transfers between spouses who are divorced from bed and board in New Jersey.

Survivor benefits

A limited divorce from bed and board allows survivor benefits on many pension plans to remain unchanged. This is also true of many federal and social security retirement benefits. This can be very important for older couples who are nearing retirement age as well as younger couples who have children.

Although it is true that a divorce from bed and board offers many financial advantages, it is important to work with a family law attorney who has experience in this arena. It is crucial to be sure of the language in your specific benefit package(s) before making any decisions. If your personal finances are keeping you from getting the final divorce you want and need in order to move on and be happy, you may also want to consider filing for NJ bankruptcy.

 

 

Image: “Marriage Rings” by Robert Cheaib is licensed under CC by 2.0

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I Received an Insurance Settlement: Can I Still File for Bankruptcy?

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If you recently received a substantial insurance pay-out, you were undoubtedly involved in some kind of accident. Perhaps you had a car accident, obtained an injury at work, or were hurt during a mishap that took place on the privately owned property of an individual or business. If your injuries were significant enough to file a lawsuit, it’s likely that you were unable to work very much (or at all) after your accident or injury.

Assuming that your injuries have prevented you from generating enough income to satisfy your bills, you may have quite a few overdue utility payments, car payments and/or past due mortgage or rent payment(s). Waiting for an insurance settlement can feel interminable and never-ending during the waiting process. Trying to get by on next-to-nothing is not only highly stressful; it’s usually virtually impossible.

As your situation deteriorates more and more, you may begin to contemplate filing for bankruptcy. After all, you have no idea how long it will be before you receive a settlement check from your insurance company, and your creditors are getting very impatient! Learning about filing for New Jersey bankruptcy, you may start to feel that it is the best option for a fresh start, eliminating many of the debts that are preventing you from being able to live any kind of normal life.

You’ve done your due diligence in making an appointment with a NJ bankruptcy attorney and have gathered all of the necessary financial paperwork. Essentially, you’re ready to open your bankruptcy case when….. you receive your insurance settlement money.

A rush of mixed emotions – should I use the insurance money to catch up on late bills and cancel my bankruptcy case?

Most debtors who are so deep in debt simply because they were injured are afraid to file for bankruptcy for fear of losing the insurance settlement money they received. For example, if you were injured at a local store when a heavy item fell, crushing your foot and eliminating your ability to work at your cashier job, can you still file for bankruptcy if and when you receive the insurance pay-out that you actually deserve?

New Jersey will allow you to decide whether to use the state or federal exemption laws to protect your settlement. You must choose one or the other, though, and cannot piecemeal an exemption plan that uses both state and federal exemption laws.

If you take a look at the NJ exemption that would help you protect your settlement money, you’d be looking at the New Jersey wildcard exemption, which allows debtors to keep up to $1,000 of any property or settlement money.

Conversely, the federal bankruptcy exemptions are much more beneficial when it comes to protecting settlement funds. If you decide to use federal exemption laws, you’ll be entitled to keep up to $22,975* in personal injury settlement payments. Additionally, you’ll be able to protect damages for lost wages, wrongful death awards and can use a federal wildcard exemption that protects any property or money of your choosing up to $1,225*.

There are many more details involved in filing for NJ bankruptcy when you’ve been injured and are anticipating an insurance settlement or other financial windfall. As every bankruptcy case varies so widely, you should direct case-specific questions to a local bankruptcy attorney who is willing to discuss your case with you free of charge.

Image credit: Christian Eberle

*As these numbers are subject to changes, please clarify specific exemption amounts with your attorney.