What to Know About Bankruptcy and Divorce
Bankruptcy and divorce are both stressful enough on their own, but when combined, they can create an entirely new level of trouble. If you’re currently facing both situations, the timing for each couldn’t be more critical. Below we’ll examine how filing for bankruptcy and divorce at the same time could play out.
Do Not File for Bankruptcy and Divorce at the Same Time
For sake of ease, you should not file for bankruptcy and divorce at the same time. Why? Because when you file for bankruptcy, the court issues an “automatic stay” that freezes your property and assets, as well as stops any creditor from contacting you. Throughout your entire bankruptcy, this stay is in effect. This is a huge problem for the divorce process, since it heavily involves the splitting up of property and assets. Essentially, the automatic stay will make it nearly impossible for the court to access your property and divide it equally. Which in turn, will result in a longer divorce process that can only bring more emotional and financial stress to your life.
Additionally, filing for bankruptcy and divorce at the same time would mean that you need to hire two different lawyers. Your divorce lawyer cannot represent you for your bankruptcy. This is because the law specifically prevents lawyers from representing clients who share a conflict of interest with the other. So, that means even more attorney fees to add onto the already financially stressful situation.
So Which Should You File for First?
Well, that depends on your situation. For example, if you and your spouse are on reasonable terms, then filing for bankruptcy first can allow you both to split the cost of attorney and filing fees, as well as potentially protect you from owing joint debt. In addition, you should also consider filing for bankruptcy first if you qualify for Chapter 7 bankruptcy. Because of the speedy nature of Chapter 7 bankruptcy, you can complete the entire process in under 90 days. On the other hand, if you do not qualify for Chapter 7, you will need to file under Chapter 13, which will take about three to five years to complete — and yes, both you and your spouse would be responsible for that repayment plan. In that case, filing for divorce first would probably make more sense.
Bankruptcy Cannot Eliminate All Forms of Debt
Unfortunately, bankruptcy cannot eliminate every type of debt. Debts deemed nondischargeable cannot be eliminated or discharged. This includes common forms of debt, such as:
- Child support
- Student loans
- Criminal fines
If you and your spouse hold a lot of nondischargeable debt, then filing for Chapter 7 will not help you. Which means that you would need to file for Chapter 13 bankruptcy instead — the form of bankruptcy that takes much longer.
Contact Benson Law Firm for Help With Bankruptcy and Divorce
If you’re facing both bankruptcy and divorce, you will need an experienced attorney to guide you through each process. Our seasoned legal team will examine your situation and help you decide which you should file for first. Contact Benson Law Firm for more information.