If you’re facing the difficult situation of a cheating spouse, it’s essential to consider both bankruptcy and divorce carefully. Let’s explore the options:
Filing for Bankruptcy Before Divorce:
Advantages:
Simplicity: If you and your spouse are on good terms, a joint Chapter 7 bankruptcy filing while you’re married can be a great idea. It eliminates qualifying debts (such as credit card balances, utility bills, and personal loans), leaving you with less to divide during the divorce.
Elimination of Unwanted Contracts: Bankruptcy can also eliminate contracts that neither of you wants to keep, such as an expensive car loan or an underwater home mortgage.
Cost Savings: Filing jointly before divorce can reduce court costs and attorneys’ fees compared to filing two separate bankruptcy cases after divorce.
Considerations:
Means Test: You’ll need to address whether your combined income qualifies for Chapter 7. If your joint income exceeds the maximum allowed under the Chapter 7 means test, waiting until after the divorce might be necessary.
Exemption Amounts: Filing jointly may allow you to increase your exemption amounts and protect more property.
Overall: When it works, filing for Chapter 7 while married simplifies the dissolution process.
Filing for Divorce Before Bankruptcy:
Advantages:
Income Threshold: If your joint income is too high to qualify for Chapter 7 bankruptcy, filing for divorce first might make sense. Sometimes both spouses qualify individually after a divorce even if they couldn’t do so jointly.
Considerations:
Timing: Waiting until after divorce to file for bankruptcy allows you to reach a divorce settlement first.
Individual Qualification: After divorce, each spouse’s individual financial situation may change, potentially making them eligible for bankruptcy.
Overall: If your combined incomes are below the threshold, you may want to declare bankruptcy before divorce1.
Remember that each situation is unique, and seeking legal advice from a qualified attorney is crucial. They can guide you through the complexities of bankruptcy and divorce, considering your specific circumstances and goals
Comments