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| Image courtesy of David Castillo Dominici / freedigitalphotos.net |
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.
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