Filing Bankruptcy: Before or After a Divorce?

Divorce is one of the most common reasons that people consider filing bankruptcy. On top of being a taxing time emotionally for many, it can also be a large financial burden. Along with other issues, the impact on both parties’ financial situations and their debts can be too much for some to handle.  Bankruptcy can be a solution for this, and there are many things to consider when it comes to the timing of such an undertaking.

The first thing for most to consider is whether they should file jointly, or separately. There are many benefits to filing jointly. The filing cost is the same whether the bankruptcy petition is joint, or individual, and filing jointly often has little increase in attorney’s fees, while filing individually can double those fees, or more.  There may be other factors to consider, such as your income and how that can affect your eligibility for certain types of bankruptcy.

Chapter 7 is a very quick version of bankruptcy often referred to as a liquidation. This type of bankruptcy is designed to handle certain kinds of unsecured debts such as credit cards and medical bills and can be completed in only several months.  However, household income and expenses can affect your ability to qualify, therefore waiting until after a divorce can sometimes be the quicker and easier route for an individual to take.

Chapter 13 is a more comprehensive type of bankruptcy in which certain debts are paid through a 3 – 5 year plan, either in part or in full. This type of bankruptcy can be the better choice for some, in order to protect certain assets or to address certain kinds of debt. Income is again a consideration here as it could affect how much the plan payment is.  Also, some divorces can be contentious, and it may be wise to consider the relationship with the ex-spouse before entering into a 3 – 5 year legal process with them amidst a divorce proceeding.

Bankruptcy can help make a divorce proceeding easier by eliminating the need to decide which spouse will be responsible for which debts through that process, especially through the quicker process of a Chapter 7 liquidation. In such cases filing bankruptcy before a divorce can be especially helpful when combined with the cost saving considerations of a joint bankruptcy discussed earlier.

If you want to discuss when filing bankruptcy may work best for you, speak with an attorney today.  Many attorneys offer free consultations and can help guide you towards the decision that will best help you.


by Barry Moore

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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