Bankruptcy and Divorce: 5 Frequently Asked Questions

Bankruptcy and divorce are more closely related than many would believe. This may be because money-related arguments are one of the leading causes of divorce. Couples typically combine finances when they get married, but many choose not to sign pre- or postnuptial agreements, which can help each spouse maintain their financial independence and security if their relationship needs to end.

If you believe both bankruptcy and divorce may be on the horizon for you, take a look at the answers to the top 5 questions about these two common legal procedures. If you need additional information or would like professional assistance with your case, please do not hesitate to contact the Law Offices of Jeffrey S. Graff today.

1. Can My Spouse File Bankruptcy Without Me?

A person can choose to file on their own or jointly with their spouse. However, the best option will depend on the unique factors within your situation (e.g., community/separate property laws, each of your financial situations, etc.).

For example, you may want to stay out of your spouse’s bankruptcy if you are about to receive an inheritance or another form of separate property that you cannot protect with state or federal bankruptcy exemptions. However, if you are both liable for debt and struggling to make ends meet, filing with your spouse may result in a clean slate that will prepare you for independent living.

2. Which Chapter Is Better if I Want to Get a Divorce?

If you plan to declare bankruptcy and then file for divorce, Chapter 7 may be particularly appealing solely because of the time frame. Chapter 7 takes just 4-6 months, while Chapter 13 takes 3-5 years. However, each chapter has many different advantages and disadvantages that you will want to discuss with your attorney.

3. Should I File Bankruptcy Before or After Getting a Divorce?

Again, the answer to this question depends on your unique situation. Generally, however, filing jointly with your spouse before divorcing can help you save money on court fees and attorney’s fees. It can also simplify the separation of assets and liabilities once you file for divorce, as the bankruptcy court may eliminate some or all of your marital debts. You might also be able to protect more property if you file together, depending on state law.

Finally, delaying a much-needed bankruptcy filing is often a bad idea. When you are struggling with debt, you run the risk of missing payments, and those missed payments can result in:

  • A damaged credit score
  • Constant collection calls
  • A debt collection lawsuit (and, as a result, wage garnishment or another serious consequence)
  • Foreclosure or repossession
  • Paying debt that the bankruptcy court could have discharged
  • Selling assets or depleting funds that you could have protected under bankruptcy

These are generalizations, however, and your attorney will be able to provide a more personalized recommendation regarding the timing of your bankruptcy and divorce processes.

4. Can Bankruptcy Get Rid of Child Support, Spousal Support, or a Divorce Settlement?

The bankruptcy court cannot discharge unpaid child support or spousal support. However, Chapter 13 bankruptcy may be able to discharge what remains of a divorce property settlement after you have made all your plan payments for 3-5 years.

5. Will Divorce Force Me to File Bankruptcy?

Divorce is often followed by bankruptcy—but it doesn’t have to be. With a skilled attorney by your side, you can protect what’s yours and build the financial foundation needed to achieve full independence.

That said, bankruptcy is a highly beneficial legal tool for hundreds of thousands of people each year. If you cannot see a way out of debt, bankruptcy might be the final step you take toward total financial and personal freedom.

Get the Answers You Need Today

Both bankruptcy and divorce can be highly stressful events. However, they can also serve as the processes that start you on a path toward a better future. I, Jeffrey S. Graff, want to be your trustworthy advocate as you navigate this challenging terrain. With 35+ years of experience and a wealth of knowledge, I can help you make the best possible legal and financial decisions so you can protect what matters most for years to come.

Call (805) 633-4999 or contact the Law Offices of Jeffrey S. Graff today. Your first consultation is free of charge.

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