Should You File for Bankruptcy or Divorce First?
Nearly half of the marriages in the United States end in divorce. There are many reasons why marriages end but one of the most common is money issues. Even when a couple has a very solid foundation and they love and respect each other, money issues are often too much to overcome and result in a marital breakdown. This is particularly true when the money issues have led to something as serious as filing for bankruptcy.
Bankruptcy and divorce are both major life events. When they happen at the same time, you may wonder which one you should manage first. Below, our Florida bankruptcy and divorce lawyer explains.
What Happens if You File for Divorce First?
Couples are sometimes tempted to file for divorce before filing for bankruptcy. This is for many reasons. Once both spouses know a marriage is over, they are both often eager to get the process over with and move on with their lives. If the marriage had become very contentious, there is even more reason to want to rush the divorce process. However, filing for divorce before filing bankruptcy can create serious problems in the future.
The divorce process can leave one spouse with a lot of debt. Marital property will be divided fairly, which does not always necessarily mean equally. Marital property refers to any assets or liabilities incurred by the couple during the marriage. Credit card debt may be divided fairly among both spouses but if one spouse cannot afford to pay their share, the creditor may go after the other spouse for the debt.
Creditors and debt collection companies are not bound by the terms of the divorce. As such, this can place both spouses in an unfavorable position even after they have legally dissolved the marriage.
Some people also want to file for divorce before bankruptcy because they worry that they will be responsible for paying child support or alimony after their marriage is officially over. It is important to know that these are known as domestic support obligations, and these cannot be discharged during the bankruptcy process.
What Happens if You File Bankruptcy First?
When you file for bankruptcy before filing for divorce, you can have your joint debts discharged, or eliminated. The debt is then no longer an issue and is not subject to division during divorce proceedings, meaning neither spouse will be responsible for repaying any portion of it. Once debt is discharged, creditors are also no longer legally able to pursue either spouse for the debt, providing both parties with a cleaner financial slate once the divorce is finalized.
Call Our Bankruptcy and Divorce Lawyer in Florida Today
Divorce and bankruptcy are both legal processes that can become quite complex. If you are considering filing either, it is important to first seek legal advice. At Nowack & Olson, PLLC, our Florida bankruptcy and divorce lawyer will provide it so you can make informed decisions that will not negatively affect you now, or in the future. Contact us to schedule a consultation with our experienced attorney.
Source:
uscourts.gov/court-programs/bankruptcy/bankruptcy-basics
