Divorce is often mentioned as a prominent reason for a bankruptcy filing. While bankruptcy added to a divorce may be tiresome, proper planning can ease some of the difficulty and make both your bankruptcy and divorce more cost-effective.
Whether you should file for bankruptcy before or after a divorce depends on a few factors: filing as a couple or separately, where you live, how much property and debt you have, and what type of bankruptcy you want to file. In today’s blog, the bankruptcy attorneys at Groce and DeArmon explain what to consider when deciding which should be filed first — bankruptcy or divorce.
Should We File Together?
Before you are divorced, you and your spouse are eligible to file bankruptcy jointly. It costs less to file bankruptcy together as opposed to apart. Thus, divorcing couples typically file a joint petition, which includes both spouses’ financial information in one set of documents. Filing bankruptcy together will also discharge the qualifying debt of both spouses, which will trim the issues to be decided in a divorce court.
But, married couples are not legally required to file bankruptcy together. An individual filing might be more beneficial if one spouse needs bankruptcy protection immediately. Each spouse may also find it easier to qualify for bankruptcy after the divorce because of a shared decline in income.
Bankruptcy and Divorce Costs
Bankruptcy and divorce costs must be considered when deciding which to file first. For bankruptcy filings, the joint fee is the same as the individual fee. Therefore, you can save a lot of legal fees if you file a joint bankruptcy with your spouse before a divorce. Filing before a divorce can also help clarify debt issues and property division. As a result, your divorce costs can be lowered.
Chapter 7 Bankruptcy
Another factor to consider is what type of bankruptcy to file. Chapter 7 bankruptcy is designed to eliminate your unsecured debts, like credit card debt and medical bills. You typically receive a discharge after just a few months, so a Chapter 7 bankruptcy can be completed quickly before a divorce.
If you wish to file jointly, you must include your combined income in the bankruptcy. If your combined income is too high and you don’t pass the means test, you might not be able to qualify for a Chapter 7 bankruptcy.
Chapter 13 Bankruptcy
A Chapter 13 Bankruptcy lasts three to five years, since you have to pay back some or all of your debts through a repayment plan. If you’re looking to file a Chapter 13 bankruptcy, it would be better to file individually after the divorce because the process takes a long time to finish.
Related Post: How To File For Chapter 13 Bankruptcy
Find the Bankruptcy Attorney for You
When considering whether to file for bankruptcy or to divorce first, there are some complicated issues that you may want to discuss with a qualified attorney. Neither bankruptcy or divorce is an easy process, and that’s why the bankruptcy attorneys at Groce & DeArmon are here for you. We’re committed to our clients and we handle each case with efficiency and care. Contact Groce & DeArmon, P.C. today to talk to a bankruptcy attorney.