How to Approach Bankruptcy and Divorce at the Same Time
Bankruptcy and divorce. These two events can negatively impact a person’s life. Handling bankruptcy and divorce at the same time, on the other hand, can be catastrophic to the person(s) dealing with these circumstances.
Good news. It doesn’t have to be.
Understanding the Difference Between Bankruptcy and Divorce
When the timing of these life events happen simultaneously, it can be much more difficult than just dealing with one of them. Both of these processes are legal processes. The difference, though, is that bankruptcy is under federal authority, while divorce is overseen by state law. Because of this, we advise you speak with an attorney at our firm before making any decisions, that way you are the most educated on each.
Should You File for Bankruptcy and Divorce at the Same Time?
Of course no one plans for bankruptcy and divorce, but if you can control it, we’d advise to not let either of these legal processes take place during the same time frame.
Why? Well, many people chose to move forward with the filing of bankruptcy before moving through a divorce. When you file bankruptcy (chapter 7 or 13) there is an “automatic stay” that is put into effect. Essentially, this puts a freeze on any assets or property and allows the courts to understand and organize the debts that you do owe.
When a couple gets divorced, most, if not all the time, they must divide and agree on who receives what assets. If there is an automatic stay initiated, the courts will not be able to have access to split these assets for you.
As a result, many divorce proceedings will be extended.
However, this does not mean that in your case you should file one before the other. Consider this - if you and your spouse are cordial during this process, why not file for bankruptcy first? Taking this approach allows you both to share the costs of an attorney and the filing fees.
Will Filing for Bankruptcy Clear All Our Debts?
It is so important to understand that just because you’re filing for bankruptcy and getting divorced, this does not protect you or get you out of all of your debts. These nondischargeable will still need to be paid. Some include alimony, child support, student loans, court fees, and more.
Always be aware of what debts you have, their status, and what will happen after you file. There are different rules for each and our attorneys will be able to help you through each of them.
Fresh Starts and New Beginnings
Just like with any legal matter, both of these circumstances should be discussed with your attorney. They can cause a lot of stress and emotions to rise, so it’s imperative that you’re educated and that they’re handled professionally.
If you’re ready to take charge of your life and finances, contact our firm today for your consultation.