Going through bankruptcy can be bad enough. It is even worse when you add divorce to the mix. How do you deal with both issues at the same time?
Both are stressful, intimidating topics. You do not want to handle them on your own. That is why you need a lawyer — either your divorce lawyer or your bankruptcy lawyer — on your side to guide you through the process.
Both divorce and bankruptcy are processes that affect each other, so it will be difficult to do both at the same time. So, which should you do first?
This will depend on your situation. It may be more beneficial to file for divorce first. In other cases, bankruptcy should be filed first. Here is what you need to know.
Filing for Divorce First
Filing for divorce first can be beneficial if one spouse earns the majority of the income. If you intend to file for Chapter 7 bankruptcy, the decision to file before or after a divorce can come down to income. In order to qualify for Chapter 7, your income cannot exceed a certain amount. These income limits are based on household size, but keep in mind that the limit for a household of two is not twice that of a single-person household. In fact, it is only slightly higher. Therefore, it may be in your best interest to divorce first and file for bankruptcy as a single person if you want to file for Chapter 7. Otherwise, you will need to consider a Chapter 13 bankruptcy, which may not be in your best interest if your income is irregular or low.
Chapter 7 is the preferred type of bankruptcy, as it wipes out debts. Completing a divorce before filing for bankruptcy can split up assets and enable both spouses to qualify for Chapter 7 bankruptcy if they desire.
Filing for Bankruptcy First
Filing for bankruptcy first can be beneficial, as it can cancel joint marital debts that would have to be divided in a divorce. This can make it so you and your spouse do not have to argue about debts during the divorce. This can be a frustrating situation, especially if you and your spouse are not on good terms.
Filing for bankruptcy first can also allow each person to hold onto more of their assets after the divorce. However, the couple would have to file for bankruptcy together, and this requires cooperation between the spouses. If it can be done, though, it would significantly streamline the divorce process. This would make things cheaper and quicker.
Contact Us Today
Bankruptcy and divorce are two stressful events. Find out the right way to make these processes easier.
The Law Offices of Adam M. Freiman can help you deal with the legal aspects involved so you can get a fresh financial start. To schedule a consultation, call (410) 486-3500 or fill out the online form.