Divorce and bankruptcy - which to file first
Bankruptcy and divorce are two touchy issues for many people. Why? Because in the first place, they are not supposed to happen, but such is life, and so they happen, anyway. Usually, whenever you hear of a divorce, bankruptcy might be just around the corner. When you plan for your situation in advance, divorce is much simpler and even more affordable. Filing for bankruptcy can be two ways; either after or before you file for divorce. However, this depends on the amount of property or debt you have accumulated as well as the type of bankruptcy that you are filing for, that is, either chapter 7 or chapter 13.
Which comes first - Divorce or bankruptcy?
There is a high likelihood of filing for divorce first when you both have a high joint income. For those who earn less than their spouse does, Chapter 7 bankruptcy appeals to them. The aim here is to eradicate the debt, which exists under your name without having to submit to a payment plan dictated by filing under Chapter 13. There are cases where both spouses qualify for Chapter 7 bankruptcy individually or jointly.
A divorce, which has been properly planned, moves some vital assets out of the influence of the trustee. For example, a house can be saved from the creditors if one spouse takes up the asset in the divorce. All this depends on the judgment about the mortgage/title.
By divorcing first, spousal support considerations are allowed. The amount of support one spouse should give the other can affect the course of their bankruptcy case. It is impossible to be given a repayment plan for your bankruptcy that your income will be unable to meet.
How much does it cost to file for divorce and bankruptcy?
People who file for bankruptcy alone or those who do it jointly are charged the same amount. Rather than filing for bankruptcy separately, it is advisable to do it jointly as it can save a great deal of attorney fees. Provided there is no conflict of interest with your attorney due to your divorce, then filing jointly is advisable.
Just how do bankruptcy and divorce relate?
Many complications arise to those who file for bankruptcy and divorce concurrently. The problematic issues arise where assets and liabilities have to redistribute. What this means it that your divorce will first take the back seat until your bankruptcy proceedings are concluded. Bankruptcy proceedings will mainly center on the social security number, personal name among other factors of a person. However, it is prudent to note that bankruptcy courts usually treat one’s debts separately irrespective of whether they are divorced, married or separated, by the time the case for bankruptcy is filed.
Why the caution when filing for divorce and bankruptcy?
If your marital situation has not yet reached ‘boiling point’ or ‘guns blazing’, then it is advisable to file for liquidation before divorce. All your debts will be settled through one case. All debts held can be jointly erased while at the same time increase the exempted amounts. Where one spouse is the breadwinner, this option is most appropriate. Their chances of meeting the Chapter 7 criteria become a possibility. Unnecessary contracts such as costly vehicle loans or house mortgages are eliminated. Chapter 7 bankruptcy takes only 90 days to get rid of all of your debts. Once you have eliminated all the unsecured debts as a couple, you are in a good position to proceed with your lives with debt relief.
For those who file for Chapter 13 bankruptcy, the repayment responsibility lies on your shoulders. There will be restrictions on the division of your assets. As soon as you are done with the bankruptcy, divorce proceeds uninterrupted.
Why employ a bankruptcy lawyer?
Legal representation is crucial in your bankruptcy case. Actually, the person you select for the job can affect the outcome of your entire case. Try to find a lawyer whose fees are within your means. Feel free to explain yourself and negotiate for a fee that is reasonable to your financial situation.
For the people who cannot afford a lawyer at all, they may try other options available. Visiting free legal aid societies or clinics is another way of helping people in tight financial fixes. For those who are lucky, they might stumble upon pro-bono attorneys. Usually, such people might be of relation or friends of the family.
Bankruptcy involves so much paperwork and many factors that only a legal brain can unravel. Therefore, you are advised not to try it alone. Legal counsel and representation ensure that your bankruptcy proceedings go smoothly, as you await the divorce eventually.
My name is Craig R. Chlarson. Whether you are seeking to eliminate your debt, typically through a chapter 7 filing, or whether you are seeking to reorganize your debt, typically through a chapter 13 filing, or even if you have basic bankruptcy questions, call me today. I can help you.
To schedule an appointment, call (435) 901-3449
Schedule Your Free Consultation
299 South Main Street
13th Floor, Wells Fargo Tower
Salt Lake City, UTAH 84111
P | (435) 901-3449
F | (801) 961-4001