07 May Which should come first, Bankruptcy or Divorce?
If you are struggling with debt and considering divorce, it is important to explore your debt relief options before taking any legal divorce action. When it comes to bankruptcy and divorce, timing is everything
Question: How Does Bankruptcy Affect a Divorce?
Answer: Family law and bankruptcy can often go hand-in-hand, making divorce a much tougher process to go through. Upon splitting up, one or both spouses may not be able to pay the family debts, or one spouse may seek to use bankruptcy as a weapon to give him/her an advantage. Further, after couple’s divorce, it can be difficult to adjust to living on one income if you have been used to dealing with two.
Question: What are the main bankruptcy issues in a divorce?
Answer: 1. The payment of child support and alimony after a bankruptcy filing
2. The enforceability of a property settlement agreement after a bankruptcy filing
3. The payment of joint credit card debt if only one spouse files for bankruptcy
Question: Is it better to file bankruptcy first before getting a divorce?
Answer: YES! Many spouses who are going to get divorced choose to file bankruptcy together first. This can make the divorce decidedly less complex in terms of the allocation of debt. When the marital debt is wiped out through bankruptcy, you don’t have to fight over who is liable for what debt. You can simply move on with your divorce with your debt problems in the past. The other benefit of this approach is that it gives divorcing couples the opportunity to file together and save money. If your marriage is breaking up, it might be nice to clean up your debts too and get a true fresh start.
Question: Can separated couple file bankruptcy?
Answer: YES! A married couple, even if they are not living together, can file for bankruptcy. After a couple is divorced, they can no longer file together, which means that each person would have to file, and incur two filing fees. You can save a filing fee if you file bankruptcy before a divorce.
Question: Is there a big impact when I file divorce first before bankruptcy?
Answer: YES! When you file for a divorce, it could make a significant impact on your personal finances, and your obligations in a property division settlement. The family court has a lot of control over the marital assets, and filing for bankruptcy at the right time could relieve many of your financial obligations to your ex-spouse in terms of the division of assets. Remember however, you cannot discharge spousal support or child support with bankruptcy.
Question: Can my ex-husband escape paying for child support and alimony by filing for bankruptcy?
Answer: The Bankruptcy Code attempts to protect the rights of children and former spouses to collect support. Any support is non-dischargeable in bankruptcy by the law.
Question: What are the benefits of both spouses filing bankruptcy together prior to filing a divorce?
Answer: 1. Dischargeable debts are eliminated, leaving more money for the payment of ongoing expenses, including support.
2. Taxes can be paid, without interest, or even discharged when sufficiently old.
3. The divorce is simplified by the elimination of much of the family debts.