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Should I File Bankruptcy Before or After Divorce?

With it being February, some people say that “love is in the air,” but if you speak to any divorce attorney, they’ll quickly tell you that they’re knee-deep in “divorce season.”

Why? Because during the holidays, unhappy couples generally hold off on their divorce filings until the New Year, especially when there are children or big family celebrations involved.

Valentine’s Day also has a way of sparking divorces, and this is especially true when a couple has just emerged from a lackluster Valentine’s Day, an experience that only confirms their worst fears.

Now that we’re on the topic of divorce, this brings us to the connection between bankruptcy and divorce. Divorce is one of the leading reasons why people file for bankruptcy. Sometimes money problems led to the divorce, and sometimes the divorce led to the bankruptcy; it goes both ways.

Bankruptcy and Divorce

The question is, should you file bankruptcy before or after the divorce? The answer depends on which Chapter you want to file, how much debt and property you have, and the state that you live in.

There are several factors that come into play, which is why you should discuss your options with a bankruptcy attorney before you file for divorce.

The bankruptcy filing fees are the same, whether you file jointly or separately, so filing before divorce will save you money there. Also, if you hire a bankruptcy attorney together, the attorney fees will likely be lower than if you filed separately.

Also, if you file bankruptcy before the divorce, it will simplify matters pertaining to debt and property division, which should result in lower divorce costs.

Will you be filing a Chapter 7 or 13?

A Chapter 7 bankruptcy discharges and erases unsecured debts, such as medical debts and credit card debt. With a Chapter 7, you usually obtain a discharge within a few short months, whereas a Chapter 13 takes between 3 and 5 years to complete.

If you’re considering a Chapter 13, you may want to file individually after your divorce is finalized.

As far as property and debt division, wiping out marital debts through a Chapter 7 can certainly simplify the process, and bring relief knowing that those debts have been erased before the divorce. However, before you file, make sure that you have enough exemptions to protect all of the marital property.

We are only scratching the surface when it comes to bankruptcy and divorce. For more in-depth information, we encourage you to contact our office to meet with our Harrisburg and York bankruptcy lawyers.