We have said many times that divorce is one of the most difficult challenges that an individual can face. Unfortunately, it is common for couples filing for divorce to also have financial issues, which may even be the basis for the split. In addition, the fallout from the divorce can also prompt one or both parties to file for bankruptcy protection. Regardless of how divorce and bankruptcy are connected, the divorce gets even harder and more complex when bankruptcy is involved before, during, or after filing for divorce.
Tips for sorting it out
Before filing for divorce and bankruptcy, many believe it is helpful to consider the following:
- Do not do it at the same time: Avoid filing at the same time whenever possible.
- Picking the order of doing them: The circumstance of each situation is different, but financial experts believe that it generally best to file bankruptcy first if the split is an amicable one. That said, there is an automatic stay of your divorce proceedings in bankruptcy that halts creditors but also makes it harder to divide assets, and which delays and drags out the divorce process. It makes financial sense to determine if an individual or joint filing for bankruptcy is better, as this can affect the division of debt in the divorce as well.
- Chapter 7 is better for a quick divorce: This type of bankruptcy (which some call the fire sale approach) allows debts to be discharged in three to six months rather than the three- to five-year payment plans of Chapter 13.
- Not all debt is discharged: It is important to remember that alimony and child support as well as student loans, court fines and money owed to the government are some of the debts not dischargable through bankruptcy.
A fresh start for you and the family
Making informed decision during this difficult time will be crucial. It is wise to speak with an attorney when considering either divorce or bankruptcy, and most definitely when you are contemplating both. While bankruptcy is handled by attorneys with a background in that field, the divorce should be done with help from by a compassionate and experienced Board-certified Family Law expert attorney in Collin County, Dallas County, Denton County or elsewhere throughout Texas.