One of the number one reasons that people divorce is because of financial problems. And financial problems, all too often, can lead to bankruptcy. So if you are considering filing for bankruptcy, the question becomes, do you file before or after the divorce? Florida Bankruptcy Attorney Monica Shepard wrote a great article on the topic of Bankruptcy and Divorce, which advocated for pre-divorce bankruptcy filings. Her rationale for filing a joint bankruptcy pre-divorce include:
- It will be easier to divide the debt and property because these issues will have been addressed in the bankruptcy
- You only have to pay to file one joint bankruptcy petition instead of two
- A prolonged divorce proceeding can complicate the bankruptcy
Another option discussed by Ms. Shepard is if one spouse files for bankruptcy on their own. This will allow the filing spouse to become debt-free while the non-filing spouse may become obligated on the remainder of any joint debts (effectively forcing them to file bankruptcy on their own).
There are some other reasons to file bankruptcy after the divorce, which may include:
- You will have a better understanding of your whole financial picture and eliminate the uncertainty of not knowing what your support obligations will be when you ultimately file for bankruptcy
However, whether you file bankruptcy before or after the divorce, you must remember that domestic support obligations (such as post separation support, alimony and child support), as well as equitable distribution agreements, are not dischargeable in the bankruptcy.
The bottom line is that you really need to meet with a bankruptcy attorney to do some pre-bankruptcy planning, as well as, a divorce lawyer to give you some guidance on what your obligations will look like after the divorce is final. If you have questions, or would like to schedule a divorce assessment, please call Cary Divorce Lawyer James Hart at (919) 460-5422.