It is very common for money problems to lead to divorce. After all, financial
troubles can lead to a great deal of stress and they can definitely strain
a marriage. Foreclosures, charge offs, evictions, wage garnishments, liens,
bank account seizures, lawsuits, and judgements – they can test
a marriage. All too often, married couples buckle under the pressure.
When a couple has financial trouble and they do not recover emotionally,
they can find themselves heading toward divorce and bankruptcy. If you’re
in this situation you’re probably wondering, “Should I file
bankruptcy before or after the divorce?”
Even if your home situation has deteriorated to the point where you want
your first call to be to a divorce attorney, our advice is to speak to
a bankruptcy attorney first. In many situations, it makes sense to file
bankruptcy before the divorce. While this could mean holding off on the
divorce for a few months, it can offer HUGE benefits and thousands, if
not tens of thousands in savings depending on the nature of the couple’s debts.
The Bottom Line
Just ask any divorce or
bankruptcy attorney and they’ll readily admit that divorce does not alleviate
the financial pressure, it merely shifts things around. The bottom line
is that divorce does not resolve anything financially-speaking if a couple
is in debt.
However, when you file bankruptcy jointly before the divorce, it makes
everything a lot easier for you and your children. It can free up cash
flow. You can even save you money on attorney fees because there will
be less debts to divide. There won’t be as much negotiating either.
Here are four reasons to consider filing bankruptcy before divorce:
- If you file bankruptcy jointly while you’re married, there will be
one court filing fee, one set of attorney’s fees, one set of documents,
and one Meeting of the Creditors.
- When you file bankruptcy, it can relieve you of liability for joint debts,
such as joint credit card debt. If you file for divorce first and you
agree to pay certain joint debts and the debt is later discharged, you
do not eliminate your promise to pay your spouse’s liability. Since
you cannot discharge your liability to your former spouse, you could have
to pay the entire debt, or you could be forced to reimburse your ex-husband
or wife if they have to pay it.
Chapter 7 case, when spouses file jointly, most if not all of their unsecured debt,
such as credit card debt, personal loans and medical debt are eliminated.
When spouses are able to eliminate thousands of dollars of debt before
the divorce, it can make the process a lot smoother in regards to property
and debt division.
If your spouse files bankruptcy before or during the divorce and you don’t
join him or her, you can be stuck with
all of the joint debt.
If you’re filing for bankruptcy and divorce in the near future,
contact our firm to meet with a
York bankruptcy attorney for free.