Many people may be lead to filing for bankruptcy because of a divorce or impending divorce. However, they may not consider if it is more beneficial to file for bankruptcy or divorce first. By taking some steps to plan your actions, you may be able to make your bankruptcy and possibly your divorce less complicated.
When people consider bankruptcy, they are generally concerned about the cost due to existing money issues. From a purely monetary standpoint, filing for bankruptcy before heading to divorce court does cut down on the costs. Filing for bankruptcy costs the same whether it is jointly filed or individually filed. If you do decide to retain a bankruptcy lawyer, your fees may be lower should you share the attorney versus getting your own. Filing for bankruptcy also will lower your debts and property, therefore making the division of your assets and obligations easier and less costly during the divorce proceedings. It is important to discuss your impending divorce with your bankruptcy lawyer before proceeding, however, to make sure there will be no conflicts of interest that will complicate your divorce.
It is important to consider the type of bankruptcy you want to file. A Chapter 7 bankruptcy is a liquidation bankruptcy and will wipe out your unsecured debts quickly. Usually it can be completed within a few months’ time. With Chapter 13 bankruptcy, however, you are put on a repayment schedule that must be completed within a 3-5 year period. This may complicate matters if you are also seeking a divorce since most people won’t want to wait 3-5 years to complete a divorce.
Filing for bankruptcy will put an automatic stay in effect for all property, so if you do so during a divorce, you will not be able to divide any property or assets until the process is completed.
You will want to consider your joint income as well. If your combined income is too high, you may not qualify for Chapter 7 bankruptcy.
If you are considering bankruptcy and are unsure whether filing for bankruptcy or divorce first is more beneficial to you, you need an experienced bankruptcy attorney at your side. Call today for your free, initial consultation.