Finances are the leading cause of stress in a relationship or marriage, and for some, money issues can also be a contributing factor to divorce. When money problems become a major issue, some couples may decide to file bankruptcy to get a clean slate all around. But, before you take action there are a few things you should know.
Should I file for bankruptcy & divorce at the same time?
While all cases involve different circumstances, the short answer most people abide by is no. Many couples heading for divorce are often advised to file for bankruptcy before the divorce. During a divorce assets are divided. When affairs are in bankruptcy proceedings,a freeze is put on assets and property. This gives the bankruptcy court time to sort everything out. But, if you file for divorce and bankruptcy at the same time, you’ll need to wait until the bankruptcy court is done with its job before the divorce can proceed. Doing both at the same time will only delay the divorce process.
What are other reasons couples file for bankruptcy before divorce?
Couples who are on good terms when they decide to divorce may lean towards filing for bankruptcy before divorce. This gives them the advantage of splitting attorney and filing fees. You can also wipe out your joint debts and may even be able to increase your exemption amounts. Don’t forget, any debts incurred while you were married are the responsibility of both parties. So, if your ex doesn’t pay up, you will have to. Also, if your ex files for bankruptcy and you do not, you will be liable for the debt. These are all things to keep in mind when dealing with divorce and bankruptcy.
Should I file for Chapter 7 or Chapter 13 bankruptcy?
Chapter 7 bankruptcy is usually a quicker process. Chapter 7 eliminates all dischargeable debt between 3 and 6 months, clearing the way for divorce proceedings. Chapter 13 bankruptcy does not completely eliminate debt. Rather, it sets up a payment plan (usually 3-5 years). This can drag out divorce proceedings. Ultimately, you need to decide which route is better for your personal situation and I would recommend getting some professional advice on this as well from a bankruptcy attorney.
Will I get rid of all debt once I file for bankruptcy?
No, you will not. Alimony, child support, student loans and any attorney fees related to child custody cases are among the most common nondischargeable debts. The best way to determine whether your debts are dischargeable is to meet with a bankruptcy attorney and go through all of your information.
Can my divorce attorney also represent us in our bankruptcy case?
No. You and your spouse cannot be represented by the same divorce attorney if you decide to file for bankruptcy; this is due to a conflict of interest.
Many people file bankruptcy before divorce to relieve some of the stress that goes along with both proceedings. By dealing with the financial aspects first, you can concentrate on other issues. Before deciding which route to take first, consult an attorney who can review all of your information and guide you towards the right path.