Will Your Divorce Affect Your Chapter 7 Bankruptcy?
Nobody wants to go through a divorce, and no one wants to go through bankruptcy. Sometimes, however, both are unavoidable. You may even need to consider both at the same time. This often begs the question of whether you should file for Chapter 7 bankruptcy or file for divorce first. Both filing Chapter 7 bankruptcy before and after filing divorce has its own benefits, and the Groce & DeArmon team looks at the pros and cons of both options below.
Filing Chapter 7 Bankruptcy First
Even if you are in the final stages of your divorce, the moment you file bankruptcy jointly, you put the divorce on pause. The bankruptcy takes precedence, and filing Chapter 7 Bankruptcy before finalizing your divorce can save you a fair amount of headache.
If you and your spouse decide to file for bankruptcy jointly before filing for divorce, you will get the opportunity to make your divorce negotiations much less cluttered. If you live in a home whose payments far exceed what either of you can afford individually, then it might not be such a bad thing to get out from under that loan and not have to pay lawyers to negotiate over the added asset.
Filing bankruptcy before the divorce also takes you off the hook for your future ex-spouse’s debts. It doesn’t matter whether you sign over your house or your car in the divorce. If your ex-husband or ex-wife files Chapter 7 bankruptcy after the divorce, creditors will come to you to make payments. Filing bankruptcy jointly protects both of you from the other’s creditors.
Filing Divorce First
Your ability to file Chapter 7 bankruptcy depends on your income. Sometimes a couple’s income exceeds the limit, but as individuals, the pair can file. In this situation, you should definitely file separately. In some cases, only one individual can file bankruptcy due to income. In this case, the couple can’t file jointly.
If you have children, you will need to take into consideration child support payments. All forms of domestic support, whether alimony or child support, stay unaffected by bankruptcy. This can make things especially confusing, and you should talk to a bankruptcy lawyer to see how these domestic support payments will alter your situation after bankruptcy.
Find the Bankruptcy Lawyer for You
Filing bankruptcy is not an easy process. You need a bankruptcy lawyer who puts you first and works with you. At Groce & DeArmon, we care about our clients, and we work hard to change their lives for the better through bankruptcy. Contact Groce & DeArmon today to talk to a bankruptcy lawyer.