Money problems play a large part in couples arguments and divorce. If there is too much debt, the question becomes should you file for divorce before or after bankruptcy. Divorce is often one of the main reasons people file for bankruptcy. The costs involved with a divorce, loss of an income, having to relocate and start over can be financially devastating.
Filing Bankruptcy Before a divorce
If both parties can agree long enough, it may be better to file for bankruptcy before you file for divorce to leave the marriage with a clean slate. Once the paperwork is filed, an automatic stay goes into effect and creditors must legally stop trying to contact you for payment. Also, filing together saves you fees, court costs and hiring a lawyer than if you were to file separately.
Chapter 7 bankruptcy will be quicker than Chapter 13, often eliminating marital debt within three to six months.
The drawbacks to filing beforehand are if it is a Chapter 13 bankruptcy, the couple will have to agree to make the repayment to the trustee for a period of three to five years. That may be a long time for people that can not get along.
Filing Bankruptcy After Divorce
If one party files bankruptcy after divorce, the non-filing spouse may be liable for the entire debt. Regardless of what the divorce decrement may say on who gets what debt, especially if you live in a community property state. If your ex-spouse files for bankruptcy you may want to talk to a bankruptcy attorney yourself to find out how to protect yourself from being saddled with all the marital debt.
Some Debts Can Not be Eliminated
Alimony or child support will not be eliminated in any bankruptcy case. Neither will court fines or money owed to government agencies.
Divorce and bankruptcy are both stressful situations and can be bright new beginnings. Speak to a Fort Worth bankruptcy attorney to find out how you can eliminate marital debt or what you need to do to protect yourself if your ex-spouse files bankruptcy without you.