Divorce and bankruptcy are two legal processes that nobody ever hopes to go through in their life, and yet seem to go hand-in-hand all the time. Financial stress and crippling debt lead to a lot of disagreements and tension, and those things can be the spark that triggers a divorce. In some cases, divorce can actually be the catalyst for bankruptcy, as the expense of a divorce plus the cost of sustaining yourself and supporting your family can wind up destroying an already-tenuous financial standing. What happens when you go through both of these processes at the same time? Read our latest blog to find out.
Should You File Before or After?
Many people who are considering both bankruptcy and divorce will often wonder which one they should file for first. The answer will depend somewhat on your circumstances, but usually it's best to file for bankruptcy before pursuing divorce. Filing for bankruptcy together has a number of benefits that could actually save both of you money in the long run and allow you to start your new separate lives on better grounds than you would if you separated and then both filed for bankruptcy.
The cost to file bankruptcy is the same regardless of whether you're married or divorced. So why pay twice? File for bankruptcy before getting a divorce and you'll save a ton of money on court fees alone, as well as your attorney fees since you're filing a joint bankruptcy. However, you may also want to inform your attorney about your plans on getting a divorce, as it could help avoid a conflict of interest.
Completing your filing for bankruptcy before a divorce also helps simplify the asset and debt division process of your divorce, since it's obvious what's on the table and what needs to be divided.
Chapter 7 vs. Chapter 13
Chapter 7 bankruptcy allows you to discharge your unsecured debts like credit cards and medical bills, but not things like tax debt and student loans. Chapter 7 bankruptcy filings are usually complete within a few short months, making the process fairly quick. Chapter 7 also requires anyone who wishes to file to pass an income test. If you file with your joint income, you and your spouse may not qualify for bankruptcy. If you separate, then your solo income may qualify you for Chapter 7.
Chapter 13 bankruptcy, on the other hand, can take several years to complete because you repay all of your debts through a repayment plan. In this instance, you may want to consider filing for divorce before bankruptcy since you could wind up being involved in a legal issue for quite some time.Want to know more about the process of filing for bankruptcy during divorce? Contact Bruce W. White, P.C. online now to get more information!