Many Americans unfortunately find themselves facing the prospects of divorce and bankruptcy at the same time. Knowing which to file first can affect your livelihood for better or worse. Filing strategically can also potentially save you a lot of money. Consider the following factors when deciding when to file for bankruptcy and divorce.
Deciding when to file for bankruptcy first depends on what type of bankruptcy is involved. Chapter 7, or liquidation bankruptcy, discharges unsecured debts and only takes a few months to process. Because it can be completed so quickly, it is often practical to do so prior to divorce. Chapter 13 is a more complex and time-consuming process. It can take as long as five years to be completed, and for that reason may need to be postponed until after divorce.
Filing a joint bankruptcy before divorce can potentially save both spouses a lot of money. Bankruptcy fees are the same for individuals and couples, so by filing jointly, spouses can share the fees. Spouses facing divorce can also share the cost of a bankruptcy attorney when filing together. Finally, filing for bankruptcy first will simplify the division of assets and matters of debt that come with divorce.
This is true especially when it comes to assigning debt to each spouse. That can be a lengthy and costly process that can be avoided if bankruptcy happens prior to divorce. Should one spouse fail to pay a debt, the other spouse is still responsible for it, even after divorce is final. You can be reimbursed for paying a debt your spouse owed, even if he or she filed bankruptcy. Trying to get a delinquent debt from an ex takes time and money. This is another reason why liquidating debt with bankruptcy before divorce can be the right option.
One issue that may prevent you from filing for bankruptcy before divorce is the income qualification for Chapter 7. Prior to divorce, you are filing jointly and must include both spouses’ combined income in the bankruptcy. If that combined income is too high, you may not qualify for Chapter 7. In that case, you must wait until after divorce and both spouses filing separately on behalf of their respective single households.
Towson Divorce Lawyers at Huesman, Jones & Miles, LLC Help Clients Make the Right Decisions in Bankruptcy and Divorce Matters
The prospect of facing divorce and bankruptcy at the same time in life can be overwhelming. It is important to ensure you make the right decisions at the right time to protect your future and minimize your losses. The Towson divorce lawyers at Huesman, Jones & Miles, LLC will review your entire financial picture and advocate for the best resolution possible for your unique situation. Call our offices at 443-589-0150 or complete our online form to get started.
We serve clients throughout Maryland including Baltimore County and the towns of Hunt Valley, Cockeysville, Lutherville Timonium, Upper Falls, Phoenix, Riderwood, Sparks Glencoe, Brooklandville, Towson, Butler, Stevenson, Glyndon, Monkton, Reisterstown, Pikesville, Owings Mills, Parkville, Hunt Valley, Pikesville, Boring, Glen Arm, Baldwin, Upperco, and Hydes.
