If you know anyone who has gone through a divorce, they are sure to have
a story or two about the troubles they faced from the point of filing
to finalization. If you know anyone who has gone through a
bankruptcy, they, too, will have tales of hardship. But what about going through
while you are going through a bankruptcy? How complicated can that be? And can
one filing impact the other?
The general consensus from family law attorneys, bankruptcy lawyers, economists,
and the like is that you should do all you can to avoid simultaneous filings.
Not only will this be unexpectedly complicated, it might not even be allowed
by your local divorce court since the judge won’t know what is going
to remain your property, marital or otherwise. Whichever can be postponed
with the least consequences, your divorce or your bankruptcy, should be
pushed back while the other one finishes.
Consider how divorce impacts bankruptcy and vice versa to make your decision:
Costs: One person filing for bankruptcy owes the court the same fees as a family
of 20. If you file for bankruptcy
before divorcing, it will theoretically be cheaper for you if your spouse is
willing to pay for half of the fees.
Chapter 7 bankruptcy can sometimes resolve in a matter of months but
Chapter 13 bankruptcy relies on a 3 to 5 year plan by definition. If your divorce cannot be
postponed for several years, you should either divorce first and then
file for bankruptcy or rely on Chapter 7.
Exemptions: A proper bankruptcy filing will let you keep some of your property, known
as exemptions. You need to determine the total value of your marital and
separate property early on. If you can jointly file for bankruptcy to
get more exemptions, file before divorcing. If you are not permitted to
double exemptions through joint filing, you might want to divorce first,
split your property accordingly, and then each file individually.
Debts: If you and your spouse have collected considerable debts together, keep
in mind that they will remain each of your responsibilities after divorce,
unless stated otherwise specifically. Most divorcing couples with significant
debts try to simplify the matter by filing for bankruptcy first, wiping
out as much as they can together, and then finalizing their divorce.
Incomes: Not just anyone can file for Chapter 7 bankruptcy. You will first need
to take a means test to show that you make less than the average household
in your state. Divorcing before filing for bankruptcy can cut your income
in half, increasing the chances of you qualifying for Chapter 7.
In the end, it really is a give-and-take situation. Postponing bankruptcy
to complete your divorce has just as many benefits and disadvantages as
the inverse. To get to the bottom of the matter and find the right solution
for you and your spouse,
contact The Pritchard Law Firm. Our Fort Worth bankruptcy attorney can provide a
free case evaluation to steer you in the right direction. All you need to do is dial