Divorce or Bankruptcy: Which One Comes First?
Bankruptcy | December 2, 2014
Going through bankruptcy is difficult by itself but going through divorce is equally stressful, painful, and financially devastating. Knowing the steps to take – and which order to take them in – can be a step in the right direction for completing this difficult journey. Whether to deal with divorce or bankruptcy first depends entirely upon your circumstances and the legal guidance that you are given. Read below for some information and advice, but be sure to consult an attorney for information on your own personal situation. In no way does this blog post take the place of formal legal counsel.
Reasons to Choose Bankruptcy First
If the divorce is a fairly amicable one, filing a joint bankruptcy is often the best decision for couples whose joint income qualifies for a Chapter 7 bankruptcy. While you will be bombarded with court fees, filing together will alleviate the amount of your bankruptcy attorney fees. Joint Bankruptcy can also eliminate joint debts or contracts that neither one of you wants to take on post divorce (for instance, a foreclosure). By the same token, some states will allow you to double your exemption amounts if you file for joint bankruptcy.
If you choose to file joint bankruptcy, let your bankruptcy attorney know about your upcoming divorce to avoid any potential conflicts of interest.
Reasons to Choose Divorce First
If you are looking to file for Chapter 13 bankruptcy, then you and your spouse will both be responsible for the repayment plan. You may be prevented from dividing assets by sale, and your joint bankruptcy case might take several months, delaying your divorce further. In this case, filing for divorce prior to bankruptcy may the best solution.
Filing for divorce prior to bankruptcy may be beneficial in circumstances where alimony or support will be assigned to one partner, or when assets (like the title to a home) are divided between spouses.
The first step to rebuilding your future is to seek legal counsel with a bankruptcy attorney or divorce attorney. He or she will give you the best personalized advice based on you and your spouse’s income, location, and other considerations. Contact the lawyers at Morgan and Morgan today to get started.