Featured News 2016 Which Comes First, Bankruptcy or Divorce?

Which Comes First, Bankruptcy or Divorce?

Bankruptcy and divorce frequently go hand-in-hand. Often, financial problems caused so much strain on a marriage, that the couple decided to divorce. Or, the couple headed straight to the bankruptcy attorney's office because they were filing for divorce.

When a couple first divorces, it's often financially stressful because the parties are now supporting two households instead of one. With looming debt, divorcing couples are interested in starting their new lives with a clean slate, debt-free.

Though each state handles debt division differently, often, a spouse is on the hook for any marital debt acquired during the marriage, despite what the divorce decree says. For instance, if a spouse agrees to pay a credit card, but they don't, the other spouse can be forced to pay it, even if the credit card was not in their name.

Since debt division weighs heavily on divorcing spouses, often, filing bankruptcy makes sense. But the question is, do you file for bankruptcy before or after your divorce?

The answer depends on what type of bankruptcy you wish to file, what types of debt you have, and what state you live in.

When should you file for bankruptcy?

Some married couples' income disqualifies them for a Chapter 7. In that case, it may be in their best interests to file Chapter 7 separately after the divorce. On the other hand, if their income does qualify for a Chapter 7, it may be logical to file bankruptcy before divorce.

A Chapter 13 involves a 3 to 5 year repayment plan, so a divorcing couple may not want to wait that long to file for divorce. If waiting is unrealistic, the spouses may file bankruptcy separately once the divorce is final.

In many situations, it is preferable for a couple to file a Chapter 7 before filing for divorce (providing they qualify), thus they have the benefit of paying half the fees and one attorney instead of two.

To determine if and when you and your soon-to-be ex-spouse should file for divorce, reach out to a bankruptcy attorney in this directory!

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