Bankruptcy | How Does Divorce Affect Bankruptcy?

Life isn’t always easy, but the hard times do help us appreciate the good times that much more. If you find yourself in a tough situation where you are contemplating both divorce and bankruptcy, knowing how they affect each other is important.

Typically, divorce takes a backseat to bankruptcy. If bankruptcy is filed during a divorce, it can potentially slow things down, specifically the distribution of assets and liabilities. A divorce court can make decisions about child support, alimony, custody and visitation, but as long as a bankruptcy court is involved, they cannot make decisions about your property.

Also, the bankruptcy can affect how your debts are handled in the divorce. Additionally, in a bankruptcy, your income is treated differently depending on your relationship status, whether it is married, divorced, or separated, so this is something to keep in mind as well.

Type of Bankruptcy

There are two types of bankruptcy and the type you file will determine how it can affect a divorce.

  • Chapter 7: This type of bankruptcy can take approximately 90 days from the time you file until it is complete. If you qualify for Chapter 7, you and your spouse can file jointly, have your debts discharged, and then follow through with the divorce.
  • Chapter 13: If you choose this type of bankruptcy, you’ll probably want to do so after a divorce. The process can take several years and if you divorce during, the case will need to be separated or closed when the marriage has officially ended. If you do choose to go through with Chapter 13 and divorce, you will both be responsible for the repayment plan, and you may not be able to divide assets by selling them.

Income

Another factor when deciding when to file bankruptcy is your household income. Filing a joint bankruptcy allows you to save money on legal and filing fees. But, both incomes will be taken into account. If your income is too high, you may not be able to file Chapter 7. In this case, waiting until after your divorce could be beneficial.

If you make significantly less than your spouse, getting a divorce and then filing bankruptcy may be a good option. This may allow you to qualify for Chapter 7 bankruptcy on your own after the divorce is final and get rid of all of your debts. In some cases, both spouses might qualify for Chapter 7 after the divorce when they couldn’t before.

Joint Debts

You should also keep joint debts in mind when deciding if you want to file before or after divorce. For example, filing bankruptcy after divorce when you have joint debts can backfire on you. The creditors can’t try to get the payment from you, but they can try to get it from your ex-spouse. If this happens, the ex can take you back to divorce court and the court will more than likely order you to pay the debt back.

Your Relationship

Being on amicable terms with your spouse can make filing bankruptcy before the divorce a good option. If your spouse is particularly upset about the divorce, though, it may be harmful to file first. The reason is, you will have to rely on them to provide necessary financial documents, show up in court, and work with you and the attorney throughout the case.

In conclusion, there are many things to take into consideration when trying to decide which to file first, divorce or bankruptcy. You will need to consider your relationship status, your income, the type of bankruptcy you plan to file, along with the types of debts and assets you have.

Specializing in bankruptcy and foreclosure law for over 20 years. Call attorney David Pinkston for a free consultation today: (904) 389-5880. If you are thinking about #bankruptcy, #chapter13bankruptcy or #foreclosure in the Jacksonville, Florida area, you should call attorney David Pinkston. David is very experienced with all aspects of bankruptcy law yet very personable and easy to talk to. Call Us Today! (904) 389-5880