Bankruptcy and Divorce

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One of the most common factors in divorce is financial problems.  Arguing about money with a spouse is one of the most destructive and painful aspects of any relationship.  When the financial situation is quickly deteriorating, it’s unfortunately not uncommon for the marriage to fall apart at the same time.

If you’re heading towards divorce in the midst of a personal financial meltdown, is it better to file for bankruptcy before or after the divorce? There are many factors to consider.

Before Divorce

One of the compelling arguments for filing beforehand is the clean slate bankruptcy can provide.  By having all of your financial issues settled and all debts handled one way or another, the process of dividing property and working out support is much easier.  Thus, it can often be advantageous to file for bankruptcy before you file for divorce.

At the same time, by filing for bankruptcy while still married, you can file once and save a second filing fee.  Plus, bankruptcy puts a hold on property division as ordered by a court, but not on support decrees, so filing for bankruptcy simultaneously with divorce can be very messy and chaotic, and extend the process for a longer period of time.

After Divorce

Waiting until after a divorce is granted to file bankruptcy has its own advantages.  If your combined income as a couple is too high, you may not qualify for bankruptcy, but after splitting incomes you may find it a viable alternative.

A Chapter 13 bankruptcy may not be possible if you plan to divorce, as the arrangements likely cannot be maintained after a divorce.  As a result, divorcing first and then filing for Chapter 13 is really the only workable strategy if Chapter 13 is the structuring you want.

In the end, you should consult with a qualified bankruptcy attorney before making any decisions.  Laws vary from area to area and your own specific circumstances will have an impact on the best approach to bankruptcy for you.

How does filing for bankruptcy during divorce proceedings affect support payments and property division?

Things to Ask and Look For When Choosing a Bankruptcy Lawyer

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Bankruptcy is one of those curious things that many people think they are familiar with simply because it’s mentioned so often.  You hear about bankruptcy on the news, in films and TV shows – just about everywhere.  It’s mentioned so often, that people believe they know how it works when they really don’t.  If they find themselves in difficult financial circumstances they often think about bankruptcy – but have no idea how to go about choosing an attorney to advise them.  Here are a few things that you should ask about when choosing a bankruptcy attorney.  PRINT THIS OUT AND TAKE IT WITH YOU WHEN YOU VISIT.

Expertise

Any attorney, technically, can help you with filing for bankruptcy – but you want one that focuses on bankruptcies.  Ask for their bona fides and avoid anyone who advertises in a wide range of fields.  Make certain that they’re familiar with the bankruptcy code revision of 2005 with some questions.  If they can’t answer immediately and coherently, they aren’t the right choice.

Focus

To avoid getting caught in the gears of a “bankruptcy mill” that handles a high volume of cases for low fees and with low attention and effectiveness, make certain your initial consultation is with a lawyer – not a staffer.

The Feel

Finally, only you can decide if you get the right “feeling” from an attorney – but don’t ignore that gut instinct.  It feels unscientific, but if you’re not comfortable with your attorney it won’t work out as planned.  Remember the initial consultation is as much for you to judge the attorney and decide if you want to work with them as it is for them to judge you.

The Fee

It’s not only polite to ask about the fee you’ll be paying for your bankruptcy filing, it’s essential.  After all, if you are broke, finding the money to pay a bankruptcy law firm is a natural concern.  However, no good bankruptcy law firm is going to be able to give you a price over the phone.  If a firm does, they are basically telling you that a 21 year old kid with 10k in debt is going to get the same attention and effort as a 52 year old business woman with three businesses and a warehouse.  However, once you sit in front of the law firm, you should expect a written price quote and an understanding of what is covered (and yes, most law firms offer payment plans)

Choosing the wrong bankruptcy lawyer can put you in a deeper hole.  Take your time, and consider carefully.