Bankruptcy and Divorce
Getting divorced but also need to file for bankruptcy? You are not alone. Many former couples find themselves in a situation where they are no longer happy and would like to separate from one another. However, they may need to file for bankruptcy as well because it is the best decision for them based on the amount of debt they have together. If you are not sure how to go about getting through the divorce and bankruptcy process simultaneously, there are some important things you should know.
It Is Possible to File for Bankruptcy as a Couple Before Divorcing
Even if you are ending the marriage because things did not work out between yourself and your spouse, you may still file for bankruptcy together. In fact, it is often better to do so when you have a lot of co-mingled debt (that belongs to both of you) and you are struggling to pay it all back. It is easy to get into debt when you have credit cards and loans that you are struggling to pay off on time, but it is hard to get out of debt because of all the extra charges, including interest payments and late fees. In some cases, it might make sense for you and your spouse can file a petition for bankruptcy together before divorcing. The benefit of filing together is that both people can have their qualifying debts discharged in one proceeding.
You Can Spend Less When Filing with Your Spouse
It is frustrating enough to have a lot of debt, but the situation tends to become more stressful when you realize that you will initially need to pay for the cost of filing for bankruptcy. While there is a fee that you would need to pay, you can end up spending less money on filing costs when you decide to file for bankruptcy with your former spouse. You can share an attorney with your spouse, which can help both parties save even more.
You Can File Separately If Necessary
In some instances, it might make more sense for you to file for bankruptcy separately after the divorce instead of with your spouse before the divorce. If you cannot get along with your spouse and things are getting nasty with the divorce proceedings because your spouse fails to communicate or compromise on anything, you might not feel comfortable with the idea of filing for bankruptcy with them. When situations like this occur, it might be a much better idea to do this on your own, even if it means you will not save as much money as you would when filing together.
Know Which Chapter Is Better When Divorcing
If you are going to file with your spouse, you need to know which chapter would benefit you more. When filing Chapter 7 bankruptcy, you and your spouse may need to sell off certain assets to pay the money back to the creditors – although you can exempt more property when filing together. Assets that may need to be sold could include additional vehicles and real estate properties. If you are liquidating everything because of the divorce, you can get through the bankruptcy process a bit faster, which means you can get on with your divorce sooner as well.
If you file Chapter 13 and make payment arrangements, those arrangements could last for several years. You would need to make sure your spouse is reliable enough to pay his or her fair share of the payments each month. If you do not think you can trust your spouse with something like that, then it is probably better to file for Chapter 13 separately after the divorce is finalized.
Need to Get Divorced Before or After Filing for Bankruptcy? Let Spencer Law Assist You
If you need to get divorced from your spouse but you also need to file for bankruptcy because of all the debt you are in, the best way to handle this will depend heavily on your specific circumstances. At Spencer Law, we can provide skilled guidance with your divorce and related family legal matters, and we can help advise you on how a bankruptcy will fit into the divorce proceeding as well. Give us a call today at 850-912-8080 to schedule a consultation.