When you file for bankruptcy, it can be a very stressful time. However, when you are filing for bankruptcy at the same time as divorce, your timing is important, and this can lead to many questions about which you should file first and how filing for one impacts the other. When you are going through this, speak with attorneys as soon as possible. They are compassionate about the struggles clients go through and understand that this is an emotionally hard time for you. However, getting your timing right when it comes to filing for bankruptcy and filing for divorce is crucial, so speaking with an attorney is one of the best decisions you can make.
Divorce and bankruptcy are so different. How do they affect each other?
When you are filing for both, you want to ensure that you follow the proper procedures and begin working on the one that can best help your situation. Thus, it is typically best to file for bankruptcy before you file for divorce. When you do this, it can delay the distribution of your assets in the divorce settlement until you are through the bankruptcy process. You won’t necessarily be going through the bankruptcy and divorce process at the same time, but it is important to know which process you should get started first.
When does it make sense to file for bankruptcy first?
There are many situations where bankruptcy will take precedence over divorce and you should begin that process first. Again, it is important to be open and honest with your attorney to establish which is most important in your situation. For example, if you and your spouse will be going through an amicable divorce, it is possible to jointly file for bankruptcy and have all debts addressed at once. This allows the bankruptcy to clear out any joint debts you two may have. Further, if you are both dealing with debt from high car loans or a mortgage, it can also help to eliminate those. When this is the case, your attorney may recommend filing for Chapter 7 bankruptcy. However, if you and your spouse file for Chapter 13 bankruptcy, you should be aware that you will both need to be a part of the repayment plan.
When does it make sense to file for divorce first?
In some cases, filing for divorce first may make the most sense. For example, if you and your spouse currently make too much money with your joint incomes, you may not actually qualify for Chapter 7 bankruptcy. When you get a divorce, it is possible that you can both then qualify for Chapter 7 bankruptcy based on your individual incomes.
While both divorce and bankruptcy can be stressful situations, speak with your attorney about how you can use either situation in your favor to help you move on with your life and start a clean slate. For more information, call a bankruptcy lawyer in Memphis, TN.
Thanks to Darrell Castle & Associates, PLLC for their insight into bankruptcy law and divorce.