5 money jams bankruptcy can fix

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Divorce is another common reason people may file bankruptcy, according to Ehrenberg.

"Often the debts are apportioned between the two spouses, and sometimes one spouse clearly can't afford to pay for those debts," he says. "And so it (bankruptcy) is frequently used along with a divorce to clean up the affairs between the two parties."

Herman says child support and alimony arrears "can usually be repaid through a Chapter 13 bankruptcy."

"The obligations of alimony and child-support are not dischargeable in bankruptcy, but other debt that was created or exacerbated by a divorce may be something that a bankruptcy can address," Herman says.

She adds that bankruptcy may be used to address credit card or mortgage debt, "especially when there is reduced income, or a previously nonworking spouse now has to live off a small income."




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