Both bankruptcy and divorce are stressful events but we can help you understand the process of timing bankruptcy and divorce. Furthermore, we can help you through it. Divorce is tough to go through and having to contend with a divorce and a bankruptcy at the same time can seem downright impossible. We’re here to help.
However, there is a strong correlation between divorce and bankruptcy, with bankruptcy often leading to divorce and divorce being one of the leading causes of bankruptcy.
As U.S. News & World Report points out that a divorce can be devastating for one’s finances, which can often require one party to file for bankruptcy. For those who are dealing with bankruptcy and divorce at the same time, it is important to understand how timing and the order of filing can dramatically affect the outcome.
Bankruptcy or Divorce First?
Choosing between filing for divorce or bankruptcy first is a decision that will have to be made early on. There are advantages and disadvantages to filing either one firs. However, the best course of action will depend on one’s particular situation.
As Divorce Magazine notes, an upside of filing for bankruptcy first is that it may mean that legal fees can be split between both spouses.
In some instances, it could also protect one party from paying certain joint debts. However, because this will entail the splitting of costs, filing for bankruptcy first usually requires both parties to be on amicable terms. Also, because bankruptcy freezes assets and property, it can make dividing assets during a divorce difficult.
If filing for bankruptcy first it is usually advisable to file for Chapter 7 bankruptcy rather than Chapter 13. That’s because Chapter 7 bankruptcy eliminates all dischargeable debt. It does this usually within three to six months. Conversely, Chapter 13 can take three to five years.
By eliminating debt faster, one can get through the divorce faster as well. Please note, not all debts will be discharged in bankruptcy. Such debts include student loans, spousal maintenance, and child support.
When deciding whether to file for bankruptcy or divorce first, avoid overlap between the two. As mentioned above, property is frozen during bankruptcy. Therefore, it’s hard for a court to divide up the marital property. That means the divorce could take longer than it usually would if the bankruptcy had already been finalized. Consequently, the divorce itself could cost more.
Get In Touch With Us
It is important to remember that when it comes to bankruptcy every case is unique. Anybody who is considering bankruptcy, especially if they are considering divorce at the same time, should contact us as soon as possible. We will analyze your situation in order to help determine the best course of action, including when to file for bankruptcy or divorce.