For many people, divorce and bankruptcy go hand-in-hand. Financial issues can put a strain on a marriage and lead to divorce. If you are thinking of filing for divorce and filing for bankruptcy, you might not be sure if you should file a joint bankruptcy before your divorce is finalized, or if you should file for individual bankruptcy once your divorce is finished. Both options have their pros and cons and will depend largely on your personal situation. In this article, I will discuss both options and hopefully you can use this information to determine what is right for your personal situation.
Filing for divorce first
In some cases, filing for divorce before bankruptcy makes sense, while in other cases, this is not the best option. Here are some scenarios in which filing for divorce first makes the most sense:
- If your joint income means that you can’t qualify for bankruptcy, getting a divorce before filing for bankruptcy is a good option.
- If your income is less than your spouse’s, getting a divorce first makes the most sense.
- If you and your spouse are not on good terms, waiting to file your bankruptcy after the divorce means that you won’t have to deal with your ex once the divorce is over.
- If you have to pay large fees for spousal or child support, you may qualify for bankruptcy more easily after the divorce is finalized. Your support payments will also be taken into account when establishing a repayment plan for your bankruptcy.
- Splitting assets before filing for bankruptcy can help you establish your bankruptcy plan.
Filing for bankruptcy first
There are some situations where filing for bankruptcy before filing for divorce is in your best interest. Review these situations before making your decision:
- Are you and your spouse on good terms? Some divorces are amicable, and if this is the case for you, by working through the bankruptcy together, you can consolidate all of your debt under one bankruptcy case. This can ultimately save you money and might be worth it if you and your spouse can communicate.
- If you want to wipe out joint debt and possibly increase exemption amounts, filing for bankruptcy before divorce might be in your best interest.
- If you make more money than your spouse, you may be able to qualify for Chapter 7 bankruptcy if you file for joint bankruptcy. Filing for individual bankruptcy might mean that you don’t qualify for Chapter 7 bankruptcy.
- Car loans, mortgages, and other major loans can be eliminated in joint bankruptcy.
- Debt will be eliminated in bankruptcy, so you and your spouse won’t have to fight over who should take on joint debt in the divorce if you file for bankruptcy first.
Filing for bankruptcy or divorce first will depend on your personal situation. Review the pros that I have listed for each scenario before making your decision. If you would like assistance filing for bankruptcy or divorce, you can contact me here or at 203-713-8877.