Financial strain combined with the decision to divorce can wreak havoc on your emotions and cause serious stress. If you are considering filing for bankruptcy and divorce, it is important to do some planning and speak to an attorney before you begin either process. There are many different factors to take into consideration, including your amounts of debt and property and which type of bankruptcy you’re interested in filing. A bankruptcy lawyer can assess your situation and advise you of the most cost-effective and practical options.
Filing Jointly Before Divorce
Even though you and your spouse plan on getting divorced, filing bankruptcy together can be much more expedient and efficient thSubmitan attempting to do it after you’ve filed for divorce. Chapter 7 Bankruptcy will discharge the qualifying debt of both parties, which enables you to avoid dealing with issues surrounding debt and property division during your divorce. Filing bankruptcy jointly also costs less than it would if you filed individually. If you hire a bankruptcy attorney to handle it, you will most likely pay less in legal fees as well.
It is important to seek the counsel of an experienced lawyer who is well-versed in the bankruptcy laws of your jurisdiction. Certain states allow married couples to double exemption amounts if they file jointly, but it is critical to have someone who knows the law determine whether a joint filing will protect all property you own with your spouse. Make sure to tell your bankruptcy attorney that you plan on filing for divorce so they can avoid any potential conflicts of interest.
In some cases, it is best to wait until your divorce is final to file bankruptcy. If your income is significantly less after divorce, it may be a good idea to hold off so you qualify for bankruptcy. However, if one spouse needs bankruptcy protection right away, they may need to file individually before or during the divorce. Using a law firm with a team that includes both bankruptcy and divorce attorneys can be extremely helpful, as they often collaborate and advise each other in these types of cases.
Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is designed to discharge all qualifying unsecured debt such as medical bills and credit card debt. It can be completed in a matter of months, so it is usually the best choice for divorcing couples who want to file for bankruptcy together.
Chapter 13 Bankruptcy
If you file for Chapter 13 Bankruptcy, you are required to pay back all or some of your debts through a set repayment plan over three to five years. Chapter 13 will not be closed until the repayment plan is complete, so if you want to make a clean break with your spouse as soon as you can, filing a joint Chapter 13 Bankruptcy is not an ideal solution.
Some Debts Cannot be Discharged in Bankruptcy
There are certain types of debt that are ineligible for bankruptcy, including:
- Child support
- Attorney fees for child custody or support cases
- Student loans
- Court fines
- Student loans
- Monies owed to government agencies
It can get even more complex if you are planning on filing a business bankruptcy. In this case, having a business attorney who is familiar with the bankruptcy process can help to insure your interests and rights are protected.
Are you thinking of filing for bankruptcy or divorce? Our seasoned attorneys at Carosella & Associates can help. Contact us to schedule a consultation.