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Should You File for Bankruptcy & Divorce?


Marriage is more than a spiritual or romantic union. It is also a financial one. Unless a couple has been married for only a short time, there is a good chance they own property together. They also probably share debts, which could include a home mortgage or a joint credit card.

Bankruptcy and divorce often go hand in hand, especially for those couples who are feeling financially distressed. But should you file for bankruptcy? And what is the timing like? We’ll walk through some of the considerations below so that our clients can make an informed choice.

Why Would You Want to File for Bankruptcy?

To understand why bankruptcy makes sense, you need a better understanding of Florida divorce. When a couple has joint debts, they must be divided in a divorce. For example, you might have both signed for a personal loan to pay for a vacation. When you divorce, a judge might assign the debt to one spouse or the other in the divorce decree.

However, creditors are not bound by the divorce decree. If your name is on a loan, you can be sued if the loan goes into default. It doesn’t matter if the judge assigned the debt to your ex. You are still legally responsible for the debt.

One way to get rid of the debt is for your ex to refinance it and remove your name. However, your ex might not do that but instead just default, which makes you vulnerable to wage garnishment and other collection efforts.

By filing for bankruptcy, you can get rid of a debt that is in your name. If your spouse files for bankruptcy, that doesn’t remove your name from the debt. It removes only his or hers.

When Should You File for Bankruptcy?

Timing is key. After you file for bankruptcy, an automatic stay halts all collection efforts from your creditors. It can also frustrate the divorce court’s ability to divide assets. So most clients confront a choice—file for bankruptcy before or after the divorce?

The choice is yours. One benefit of filing after is that you don’t have to delay the divorce should your bankruptcy hit a snag. You also will know what debts you are responsible for. You should also file after if you want to do a Chapter 13 bankruptcy, which requires sticking to a 3-5 year repayment plan.

Filing for bankruptcy before divorce could be an option if you are pursuing a Chapter 7 liquidation, which can usually go through in a few months. However, there is a means test you must pass to qualify, which looks at your income. You should consider whether you will qualify while married or single.

Meet with a Plantation Bankruptcy Attorney

Every client has different needs. To better understand the best choice for you, meet with a Plantation bankruptcy lawyer at Nowack & Olson today. Our team has helped over 20,000 people obtain debt relief. We can help you, too.

To schedule a consultation, please call 888-813-4737.


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