There are two life events that most of us never want to consider. One of them is divorce and the other is filing bankruptcy. Unfortunately, there are times in our lives when the possibilities of these two events occur and in rare circumstances, they occur at approximately the same time. If you and your partner are considering a divorce and you are considering bankruptcy, you should speak with an Acworth bankruptcy attorney to determine your best course of action. In some cases, it may be beneficial to wait until after divorce to file bankruptcy while in other cases, filing bankruptcy first may be the best option.
Why file bankruptcy before divorce?
In many cases, bankruptcy before divorce can simplify your divorce. Should you and your partner elect to file joint bankruptcy, all of the debts you have outstanding would be eliminated. This means there are no disagreements over who has to pay which bills. In addition, filing for bankruptcy before divorce means you are typically entitled to higher exemptions than you would be entitled to if you were to file as a single person after a divorce.
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Should you and your partner determine that bankruptcy is the solution for debt, before you make a decision about filing for divorce, talk to a bankruptcy attorney in Acworth. Keep in mind, if you do not qualify for Chapter 7 bankruptcy, both of you would be responsible for any payments required under Chapter 13 after your divorce.
When would it be beneficial to file divorce first?
When considering whether to file for divorce or bankruptcy first, the primary consideration is going to be financial. For example, if your combined joint income and allowable exemptions do not allow for a Chapter 7 filing, it may be beneficial to wait until after you file for divorce and have only one income to qualify. However, there are some challenges to this including:
- Joint credit cards – jointly held credit card debt is often settled in a divorce. In some cases, the court may order one partner to pay certain debts. If you file for bankruptcy and include those debts, the creditor may go to your spouse to collect on the debt which could result in a contempt of court charge against you.
- Determining bankruptcy chapter – if you file for bankruptcy after divorce and qualify for a Chapter 7 filing, you get a completely fresh start. If your lower income qualifies you for Chapter 7 it is a good way to start over. However, if your income is reduced, and you do not qualify for Chapter 7 maintaining the payments on a Chapter 13 will be your sole responsibility.
These decisions are very complex and each case must be evaluated individually. Before you consider filing for divorce, it is a good idea to consult with an Acworth bankruptcy attorney to determine what steps you should take. Divorce is a life-altering event as is bankruptcy and the decision of which one to file first is important for your financial future.