Bankruptcy and Divorce
All too often, overwhelming debt can cause serious problems in a marriage and often lead to divorce. If you and your partner are considering divorce and have outstanding debt, it’s possible that one or both of you might end up filing bankruptcy.
Should you file bankruptcy before or after a divorce? I generally advise clients that it’s best to file bankruptcy before your divorce for several reasons.
First, the discharge of overwhelming debt may remove a serious strain on your relationship. With the removal of this giant source of stress, couples can focus on their relationship, reconcile and avoid divorce.
Even if the marriage can’t be saved, a bankruptcy prior to filing will make the divorce process much smoother. Just as couples fight over assets in a divorce proceeding, there will also need to be a decision regarding the assumption of debts. Divorce is expensive, and extended negotiation regarding the assumption of debts will greatly increase the cost of the divorce.
Filing bankruptcy prior to divorce will save you money. We’ve already discussed the cost associated with addressing debts in bankruptcy, but if you’re both headed towards filing, it will be cheaper to file together, before the divorce. By filing together, you will only have to pay one attorney and one court filing fee. Even if you and your spouse are no longer living together, you may still file a joint bankruptcy if you are still legally married.
If debt has placed a serious strain on your marriage and you are considering a divorce, you should speak with an experienced bankruptcy attorney. At the very least, you’ll make the divorce proceeding much easier.