During the occurrence of a divorce, you will most likely have many questions that you have thought of or should ask your attorney so that you are well prepared beforehand. Many marriages end in divorce because of disagreements on finances and in some cases, your questions may revolve around bankruptcy and debt that has occurred during your relationship or could occur in the future. Filing for bankruptcy during a divorce includes important factors such as when and how you should proceed with it; whether it is before or after the divorce is finalized. Time management for filing a bankruptcy case can be stressful and depending on your current situation you may want to consider one option over the other depending based on what approach you and your lawyer think is best.
Woman and her lawyer in conversation with husband – Shutterstock
How to approach filing for bankruptcy
Before you consider filing for bankruptcy, be sure to understand the process and whether you want to file for a chapter 7 or chapter 13 bankruptcy. A chapter 7 bankruptcy is very quick and is a good option if you wish to apply for it before filing for divorce because it covers debts such as different medical bills and credit card bill statement. A chapter 13 bankruptcy is better if you plan to repay all of your debts but it takes a long time for it to be completed from three to five years in most cases.
Filing for bankruptcy before a divorce
One reason why people file for bankruptcy before a divorce is because of a mortgage they need to pay off in the near future. Because of your mortgage debt, you will want to file for chapter 7 bankruptcy. After filing for bankruptcy and eliminating your debt, you can file for divorce because you no longer share a joint responsibility with your spouse to pay off a joint account or debt.
It could be difficult for you or your spouse to cooperate with each other about dealing with debt and filing for bankruptcy on top of divorce, but dealing with it first can be the best thing for both of you. If you apply for bankruptcy after a divorce, you will read later on that it can make filing for it more stressful.
Filing for bankruptcy together
Deciding to filing for bankruptcy with your spouse before a divorce can help save money on cost fees and save you any future hassle of dealing with filing for bankruptcy. If you file for bankruptcy separately whether it is before or after the divorce, the overall fees are much higher and you will need to combine both of your current incomes in the filing process. If you both have a high income and wish to apply for chapter 7 bankruptcy, it might be best to file for it after the divorce when you can apply for it because of your solo income. Check your state’s laws because each state may have different exemption laws than others. Also be sure to talk to a lawyer who specializes in these cases (Richard Palmer Bankruptcy Attorney is one of the best known if you live in Ohio) who can help you both decide how to proceed.
Filing for bankruptcy after a divorce
In a case where no one has filed for bankruptcy and one of the spouses decides to file for it after the divorce, creditors will go to the other spouse to have it be paid off because either person who did not file for bankruptcy is considered still responsible for all debt that needs to be paid even if one spouse agreed to handle a specific debt. If you are worried that your spouse will wait to file for bankruptcy until after the divorce, share your concern with your attorney to see if you can file for it as an individual instead of together before a divorce to make sure you are covered.
If both spouses decide to file for it after the divorce is finalized, both will end up paying the full costs that could have been reduced if they paid beforehand.
If you are worried about bankruptcy and debt that may occur because of your future divorce, understand that you have options. Speak with your spouse about applying for either chapter 7 bankruptcy for debt relief in a short amount of time or chapter 13 to repay all of your debt (though it takes considerably longer) together before you file for divorce.
Lilly
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