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Choosing Whether to File for Bankruptcy Before or After Divorce

Posted on in Bankruptcy

Choosing Whether to File for Bankruptcy Before or After DivorceDivorce and bankruptcy are both legal processes that can help you reconstruct your life. In some cases, people need both divorce and bankruptcy at the same time. In fact, either one can lead to the other:

  • Financial stress can cause conflict in a marriage; or
  • Divorce can be expensive and leave each side with less income to use towards debt repayment.

If you know you are likely to file for both divorce and bankruptcy, choosing which one you do first can affect how your bankruptcy case is settled and which form of bankruptcy you qualify for.

Bankruptcy Before Divorce

Jointly filing for bankruptcy with your soon-to-be former spouse may be more cost-effective than filing individually after your divorce. Married couples qualify for double the bankruptcy exemption on their assets. Completing your bankruptcy is also helpful for when you must divide your marital properties during your divorce. You will have a better idea of your existing assets and debts. However, filing for bankruptcy together will require you to cooperate with your spouse until the process is complete. Chapter 7 bankruptcy case can be resolved in months, but a Chapter 13 repayment plan can take years to complete. A divorce court may require you to file a motion to lift the stay of your bankruptcy before you can finalize your divorce. 

Bankruptcy After Divorce

Filing for bankruptcy after your divorce may allow you to qualify for Chapter 7 bankruptcy because your income as an individual may be low enough for you to pass the means test. If filing for Chapter 13 bankruptcy, completing your divorce first will allow you to account for your child and spousal support obligations when creating a repayment plan. Both are considered necessary expenses that bankruptcy cannot discharge. Finally, you may be able to divide some of your debts from your marriage during your divorce. If your spouse has debts separate from your marriage, you may be free of obligation from them. However, you are both still responsible for joint debts you accumulated. Even if you agree to divide the debt during your divorce, a creditor may come after you if your former spouse does not pay his or her share of the joint debt.

Bankruptcy and Divorce

You should consult with a bankruptcy lawyer before deciding whether to file jointly or individually. A Frisco, Texas, bankruptcy attorney at The Page Law Firm has experience in both bankruptcy and divorce law and can advise you on how your divorce and bankruptcy will affect each other. Schedule a free consultation by calling 214-618-2101.


National Association of Consumer Bancruptcy Attorneys State Bar of Texas
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