It’s an unfortunate combination, but couples who are dealing with divorce also have to worry about the financial aspect of being alone. If you know you are going to have a divorce, but also have racked up a large sum of debt, then you may not be sure of which comes first, the divorce or filing for bankruptcy.
Usually, bankruptcy is what you will need to focus on more than filing for your divorce. If you file for bankruptcy during a divorce, it can delay the distribution of assets and liabilities until it is completed. You cannot finish the divorce until the bankruptcy is completed. This results in no real way that you can do it at the same time. It would be beneficial for you to handle each problem separately. The court will also treat your income differently depending on whether you are married, separated, or divorced when you file the case.
We recommend filing for bankruptcy first if you and your spouse are on good terms. If you file as a joint couple, the debt will be addressed under one case. If you have any joint debt, you can handle that together. Filing while you are still married may also be a way to increase your exemption amount. It could also eliminate contracts that neither of you wants. Chapter 7 bankruptcy should be finished within 90 days. If you file for Chapter 13 bankruptcy, however, you will both be responsible for the repayment plan. This may also prevent you from dividing assets by sale.
If you are considering filing for divorce first, this may be the better option if your joint income is too high to qualify for chapter 7 bankruptcy. There are many cases that the 2 individuals would qualify for chapter 7 bankruptcy as individuals, but would not if they were joint.
Always contact a lawyer if you are unsure what the best option is for you. Palacios Law Group is always here to help.
Source: All Law