Getting divorced from the person, you thought you would spend your life with can be one of the most stressful and demanding situations of your life. When coupled with financial problems, things can get even more complicated. Moreover, divorce is the leading cause of financial ruin for many people, so it is essential to consider your bankruptcy options.
If you are considering both divorce and bankruptcy, it is important to understand the processes properly. You can take Help from a bankruptcy attorney. They can suggest the best course of action and prevent you from making grave mistakes.
Filing for bankruptcy before divorce
If you are deep in debt and there is no way to pay back the loans, then you might benefit from the bankruptcy debt relief option. When it comes to filing for bankruptcy, you have two options: filing before or after the divorce. There are pros and cons to both.
Filing for bankruptcy before your divorce can discharge your unsecured debts. Therefore, it makes the property division easier as you won’t have to burden your spouse with your debts. The court will remove the debts, and the creditor will stop calling you.
Filing for bankruptcy after divorce
If you are considering filing for bankruptcy after your divorce, then Chapter 13 would be a better option. It will help you hold onto your property more. However, Chapter 13 is only an option for people who earn too much to file for Chapter 7.
Factors to consider to decide when to file
- Bankruptcy type.
One of the biggest factors in deciding when to file is the bankruptcy type. If you are considering filing before the divorce, it is best to file a Chapter 7 bankruptcy. You and your spouse can file together, discharge your debts, and then proceed with the property division process.
- Household income.
Household income is another important factor. Filing for bankruptcy together will help you and your spouse save money on filing as well as court fees. However, since both your and your spouse’s income will be determined for bankruptcy, it could exceed the limit for Chapter 7 bankruptcy. In such a case, filing afterward might be more beneficial.
- Relationship status.
If you are on friendly terms with your spouse, then filing before the divorce may be a better option. Filing when you have a hostile relationship can be difficult because you would need to work with your spouse to show up in court, arrange the paperwork and discuss things. Do not forget to consider your relationship status when deciding whether to file before or after.