Divorce and Bankruptcy: The Chicken and the Egg

It goes without saying that many times when a couple is having enough financial trouble to think about filing bankruptcy, they might also be considering divorce. For that reason it is worth thinking about which should be filed first:

Bankruptcy first – Filing for bankruptcy first allows the couple to shed debts prior to filing for divorce. This makes the divorce process easier since the family court will not have to divide up those debts.

Divorce first – If a couple’s income is too high, they may not qualify for certain types of bankruptcy. Divorcing is an easy way to “lower” the income that the debtor will have to report on his/her bankruptcy schedules.

File both at the same time – While this is possible to do, it is unlikely to be the best scenario because (in addition to forcing you to spend almost every waking minute attending hearings and traveling to and from court) both the bankruptcy court and family court will need information based on the proceedings in the other court. This means that unless you get very lucky, there will likely be significant wait times in one court while the other makes certain decisions and once that decision is made there will likely be another long wait to get the next decision from the other court.

Divorce and bankruptcy, unfortunately, happen together quite often. The above situations are only some of the many issues to be considered when determining when to file for either type of proceeding.

Please discuss your situation and strategy with a qualified family law lawyer and an equally qualified bankruptcy lawyer before making a decision.

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