Should You File Bankruptcy Before or After a Divorce?

Divorce is stressful enough as it is, but when you’re going through challenging financial times, you may also need to consider filing for bankruptcy. Before taking any steps toward filing either case, it’s important to consider how you’ll go about handling your divorce and your bankruptcy.

Should you do one before the other? Which should come first? The answer to these questions depends on your situation.

The Need for Bankruptcy

No one ever truly wants to file for bankruptcy, but sometimes, the need outweighs personal feelings regarding the matter. If you’ve gotten to the point where financial responsibilities become unmanageable and you don’t see another way out, bankruptcy could be the answer.

Bankruptcy can be complicated, especially depending on the type of bankruptcy case you file. Getting advice from a skilled bankruptcy professional can help you make the right choices for yourself and your future.

Filing for Bankruptcy Before a Divorce

If you’re facing both bankruptcy and a divorce, filing your bankruptcy case before your divorce has certain benefits.

First and foremost, if both you and your spouse wish to file for bankruptcy together, doing so before a divorce allows you to file for joint bankruptcy. This can be more convenient and cost-efficient than two separate cases. Additionally, both of you can benefit from debt relief.

Oftentimes, couples file for Chapter 7 bankruptcy, which allows for the discharge of certain debts, like credit card and car loan debt. Once you’ve discharged your debts, the divorce process, especially asset division, is much more streamlined.

Spouses can also file for Chapter 13 bankruptcy, but this process often takes a long time to complete. This is one of the reasons why, when they qualify, spouses opt for Chapter 7.

Filing for bankruptcy before a divorce also allows spouses to take advantage of either federal or Michigan exemptions.

Filing for Bankruptcy After Your Divorce Is Done

Filing for bankruptcy after divorce may work better for some individuals, depending on the circumstances.

If you’re considering filing a Chapter 13 bankruptcy, waiting until after your divorce might be better. Instead of discharging debts, Chapter 13 allows for repayment plans. If you file for Chapter 13 with your spouse before your divorce, this could mean years of debt repayment obligations with your ex-spouse post-divorce.

Additionally, if you don’t qualify for Chapter 7 bankruptcy before divorce as a married couple because your income is too high, you may be able to qualify after your divorce is finalized.

An Experienced Attorney Can Provide Personalized Guidance

Both divorce and bankruptcy can be difficult to navigate. Therefore, it’s important to get qualified legal help from a skilled divorce lawyer to help make the process easier for you and give you much-needed peace of mind.

Before filing for bankruptcy or divorce, discuss your situation with a divorce attorney. A lawyer can give you advice tailored to your circumstances and help you decide how to handle your divorce and bankruptcy for the best possible outcome.