Bankruptcy and Divorce Frequently Go Hand in Hand
Divorces are often preceded by financial strife, which is why many couples opt to file for bankruptcy along with the divorce. Both issues can be emotionally charged, but they can represent a fresh start for both spouses. As we’ll discuss in more detail below, the most logical order for this to happen is to file for bankruptcy first.
Filing for Bankruptcy Before Divorce Saves Money
Because funds are likely low at this point, it makes sense to file one bankruptcy proceeding, rather than two, which can only be done while you and your spouse are still married. One proceeding means one filing fee and one legal fee. Completing your bankruptcy first will also eliminate the requirements that you sort through in the process of dividing all of your debt. Litigating which debts to assign to each spouse is costly in a divorce.
A note of caution: it is a good idea to consult with an experienced family law and bankruptcy attorney prior to filing any divorce or bankruptcy documents so that you can ensure that you are allowed enough exemptions to protect the property that you and your spouse own.
Filing for Bankruptcy First Can Smooth out the Divorce Process
Divorce is never easy, but minimizing the financial stress and knowing that you won’t be faced with both a single income and a massive debt can make your decisions easier. Emotions can run high when faced with economic uncertainty. Completing a bankruptcy first can help reduce animosity, which can reduce the time it takes to complete your divorce, which can also reduce your financial expenditure for the divorce.
Bankruptcy Can Provide More Peace of Mind
If your debts have been forgiven through bankruptcy, you gain a certain amount of assurance that unwelcome surprises will not pop up. Choosing not to file for bankruptcy prior to divorce causes additional tension because, even though one spouse may have been assigned a debt, both spouses are still obligated to pay the debt. So, if your husband was assigned a certain vehicle payment and he defaults, you, as the other responsible party, will need to pay the bill or risk having a repossession or other derogatory credit item that may be more difficult to get rid of than a bankruptcy notation.
Bankruptcy, Spousal and Child Support
There is a common misconception that bankruptcy can wipe out spousal or child support obligations. This is most definitely not the case, but it does mislead many couples into filing for divorce first. Filing for bankruptcy first will not reduce any spousal or child support obligations, but it may make it easier for you to financially handle these obligations.
Both divorce and bankruptcy are highly personal matters that are often complicated by anger and other negative emotions. At the Sarieh Law Offices, we can assess your situation, answer your questions and assist you in finding a bankruptcy attorney that can meet your needs prior to filing for your divorce. Contact us today to speak with an experienced family law attorney in a free 30-minute consultation. Call 714-542-6200 or fill out an online contact form to get started.