In this economy, bankruptcy and divorce do often come hand in hand. Many people facing financial difficulties are also dealing with the increased strain that places on their marriage, and sometimes it comes to a breaking point. The question is then, which step do you take first?
Bankruptcy before Divorce
If both parties intend to file bankruptcy, it makes sense to file prior to the divorce. That way, all debts are taken care of prior to having to divide them up in the divorce, and the parties are able to part ways both with a clean slate. However, there are situations that make it more beneficial for a party to wait to file bankruptcy until after the divorce, even when both intend to file. This may include a situation where one party makes significantly less income than the other and may qualify for a Chapter 7 individually, where if the parties filed together they may be above the threshold for Chapter 7.
If only one party plans to file for bankruptcy, it is best to wait until after the divorce is final. That way, the party knows what debts will be assigned to them in the divorce proceedings and what would or would not be dischargeable in bankruptcy.
Of course, every situation is different and it is beneficial to consult with a divorce and bankruptcy attorney prior to taking the next steps in your case. Experienced attorneys will be able to tell you based on your situation which process is best for you, and also the benefits and downfalls of filing for divorce before bankruptcy and vice versa.
