Miami Bankruptcy & Divorce Lawyer
Florida Bankruptcy & Divorce Attorney Helping Families in the Miami Metro Area
Financial problems often lead a couple to file for divorce, yet divorce can also result in significant financial difficulties. We often work with clients who want to know whether they should file for divorce or bankruptcy first. In other words, will it be easier to file for bankruptcy with your spouse and then seek a divorce once your debts have been discharged, or will it be easier to get divorced and then file for bankruptcy? The answer to this question depends upon the specific individuals involved and the types of marital assets and debts that exist.
In many cases where there is substantial marital debt, it could make sense to file for bankruptcy prior to divorce. An experienced Miami bankruptcy & divorce lawyer can examine your case and can discuss your options with you.
Understanding How Marital Debts in Miami Affect Bankruptcy Cases
Florida is what is known as an equitable distribution state. This means that all marital property—including both assets and debts—are divided in divorce in a manner that is equitable or fair to both of the parties. Why would a couple want to file for bankruptcy prior to filing for divorce? In short, it can help the couple to get rid of debt before property is divided.
Options for filing bankruptcy before your divorce:
- Both spouses file together for Chapter 7 bankruptcy;
- Both spouses file together for Chapter 13 or Chapter 11 bankruptcy (depending upon the amount of debt the couple has); or
- One of the spouses files either for liquidation (Chapter 7) or reorganization (Chapter 13 or Chapter 11) bankruptcy.
If there is a significant amount of marital debt and relatively few marital assets, filing for bankruptcy before you file for divorce can be extremely beneficial to both parties. However, in cases where only one spouse has significant non-marital debt (in other words, debt that belongs to that spouse alone as opposed to debt that belongs to the marriage), it could make more sense to file for bankruptcy after the divorce.
Benefits of Filing for Bankruptcy Before You File for Divorce in Miami
When there is a lot of marital debt, filing for bankruptcy as a couple prior to filing for divorce can help both spouses in the long run. When you file for bankruptcy in Miami, you are required to use the Florida bankruptcy exemptions instead of the federal exemptions. For most married couples, this is a good thing because it allows the couple to use the homestead exemption to keep the home and to double many individual exemptions. Together you can exempt, for example:
- All the equity in the marital home;
- Up to $2,000 in personal property;
- Up to $2,000 in a motor vehicle exemption;
- Health savings accounts;
- Hurricane savings accounts;
- IRAs and other retirement benefits;
- Pensions; and
- Up to $4,000 in other protected assets if you are not claiming the homestead exemption.
Learn More from a Miami Bankruptcy & Divorce Lawyer
Filing for Chapter 7 bankruptcy in particular can allow a married couple to discharge debts before the divorce and to get a fresh start. If you have questions about filing for bankruptcy in relation to divorce, a dedicated Miami bankruptcy & divorce lawyer can help. Contact Nowack & Olson, PLLC today.