While adding another complicated and stressful legal proceeding to your slate at the same time you are dealing with a divorce might seem counterproductive, filing bankruptcy at the right time can actually help you come out of the divorce process with less overall stress. Financial woes are actually very common for people going through divorce or dealing with the aftermath of divorce, and bankruptcy might be the tool you need to create a more viable future.
Before you choose to file bankruptcy, you should understand exactly how it might work with your divorce. Money problems are a top reason people report for splitting up, so before you get to the actual divorce, consider whether you have money problems in the marriage. If so, and you won’t be attempting to keep assets such as a home, then you might want to consider Chapter 7 bankruptcy. If you both qualify to file Chapter 7, then you can leave the marriage with a simpler financial lifestyle. In some cases, houses and other property might be exempt and can later be divided in a divorce.
In Chapter 13 bankruptcy, you create a plan for paying off your debts. That plan usually lasts three to five years. While it’s possible to enter into a Chapter 13 bankruptcy plan, divorce and modify the plan, this can be time consuming and doesn’t always work in your favor. If divorce is imminent, then you might want to hold off on filing Chapter 13 bankruptcy. You can file a Chapter 13 petition individually once you are divorced, protecting your own assets and working to create a plan that works for you.
There have been cases of couples who make bankruptcy a condition of divorce. Whether this is the right path for you is a personal choice that should be discussed with an experienced divorce lawyer.
Source: My Horizon, “Should I File Bankruptcy Before Or After My Divorce?,” Bethany Lape, accessed June 03, 2016
