A lot of divorcées will readily admit that financial problems contributed to their
divorce. After all, crushing debt and extended periods of unemployment can place
a great deal of strain on a marriage. If you are getting a divorce and
contemplating bankruptcy, you’ll need to get all of the facts before
you take action.
When it comes to bankruptcy and divorce,
timing is everything. Should you file bankruptcy before or after divorce? Unfortunately, we
don’t have a cookie-cutter answer to that question because it all
depends on: 1) the types of debt you have, 2) both of your incomes, and
3) whether you can qualify for a Chapter 7 while married.
What You Need to Know
For starters, it costs the same to file for bankruptcy whether you’re
married or divorced. So, if you file for bankruptcy while married, you
and your spouse can split the cost. If you decide to get a divorce while
filing for bankruptcy, make sure that all attorneys involved are aware
that both actions are pending.
If you and your spouse have a lot of unsecured debt, such as credit card
debt, medical bills, and personal loans, filing for bankruptcy before
divorce can simplify debt division; it can also lower your overall divorce costs.
Generally, individuals and couples file for Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 bankruptcy is reserved for low-income filers who meet the income
requirements. Through a Chapter 7, many types of unsecured debts can be
wiped out. What’s nice about Chapter 7 is it doesn’t take
long to complete, so it can be done before a divorce if the couple’s
income qualifies. If they earn too much together, they may need to file
individually after the divorce.
For debtors who don’t qualify for a Chapter 7 (they earn too much
money), they are averted to filing a Chapter 13 instead. With a Chapter
13, the debtors are placed on a 3 to 5-year repayment plan where they
pay all or a portion of the debt over the life of the plan. So, if you’re
going to file a Chapter 13, it’s probably better to file it after
the divorce because it takes so long to complete.
What Should You Do?
If you’re interested in filing divorce and bankruptcy, it’ll
be very beneficial to seek the advice of an experienced Pennsylvania divorce
lawyer before you file either case. We invite you to
contact Cairns Law Offices to schedule a free consultation. We’d be more than happy to answer
your questions and help you decide on the best plan of action.