Filing Bankruptcy Before Filing Divorce
Looking for the best bankruptcy attorney in Phoenix AZ? Gaudiosilaw specializes in Bankruptcy Law and can help decide whether filing for bankruptcy before divorce is the right move. Let’s dive right in!
Going through a divorce is stressful enough but often debt goes along with it. Couples frequently must decide which party is going to assume debt or sometimes debt is divided among the parties. Furthermore, when a couple splits, the household goes from a two-income household to single income. This divide makes keeping up with the bills that much harder.
You shouldn’t have to go through divorce only to come out with a mountain of debt that you now have to handle on your own. This is why a large percentage of divorcing couples end up in bankruptcy court. But, when is the best time to file bankruptcy, if heading into divorce court? Wondering what “the best chapter 7 bankruptcy lawyers near me” would suggest? Let’s look at all the possibilities t.
Assuming you still need to file for divorce, this may be the best time to file for bankruptcy. If you and your spouse are amicable enough to file together, you can file alone, which is even better. Filing on your own will get rid of all the debt.
You can go into the divorce court free of debt; however, if the divorce court mandates that you must pay any part of the debt as part of a domestic support Order (DSO), your bankruptcy might not help you.
In Chapter 7 bankruptcy, all DSOs are non-dischargeable. In Chapter 13 bankruptcy, you can pay off any DSOs through the Chapter 13 plan, and any remaining unpaid debt will be discharged at the end of your case. This article will not cover chapter 13 bankruptcy and divorce. Trying to decide if you should file for Chapter 13 or Chapter 7, read this article.
If you are fortunate enough to file a joint case, all the debt would be discharged, and there would be no need for any debt-related DSOs. If you file on your own before going into a divorce, you might still owe some debt if it is court-ordered that you are required to pay unless you have filed a joint case, which will discharge all the debt for both parties.
Bankruptcy Before Divorce
A couple is afforded more and higher bankruptcy exemptions when they file jointly. These exemptions protect your property from being lost to a bankruptcy trustee. This option also works best if you qualify for Chapter 7.
If you do not qualify for Chapter 7, consider whether you can cooperate with your spouse during a Chapter 13 plan, which may last three to five years. Need to talk to a professional, contact the best bankruptcy lawyer in Phoenix AZ.
Benefits of Filing for Bankruptcy Before Bankruptcy
- You and your spouse will only pay one filing fee, and you can split the bankruptcy attorney fee making it cheaper.
- If the debt you and your spouse owe is discharged through bankruptcy, this will prevent your creditor from trying to collect that debt from you or your spouse after your divorce.
- When you file for bankruptcy before filing for divorce, property division during the divorce will be a lot easier.
- Filing a joint bankruptcy can increase the exemption limit compared to when you file alone, and you protect important property.
Disadvantages of Filing for Bankruptcy Before Bankruptcy
- To spite their partner, one spouse might file for bankruptcy before the divorce, leaving all the debt to the other spouse.
- Filing for bankruptcy requires couples to work together, and this can be difficult if they’re heading toward a divorce.
- While filing as a couple allows for higher exemptions, it is also possible that it won’t be enough to protect those assets you are most concerned about. Waiting until after property division is done as part of the divorce may allow you to use your exemptions on the property that matters the most to you.
Never File For Divorce and Bankruptcy at the Same Time
I cannot ever recommend filing for divorce and bankruptcy at the same time. Filing bankruptcy prevents any current legal proceedings, so you must inform the family court judge that a bankruptcy has been filed. Additionally, once you file bankruptcy, all your and your spouse’s assets become part of your bankruptcy estate. If you have any assets not protected by a bankruptcy exemption, then you may lose those assets to the trustee for liquidation.
If you and your spouse are considering filing bankruptcy and you will also end up in family court for divorce, contact me to discuss your case and whether filing bankruptcy or divorce first would be best for you, depending on your situation. Considering filing for divorce before bankruptcy, read this article.
To explore your options, contact the best Arizona bankruptcy lawyer.
