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Is It Better to File for Divorce Before or After Bankruptcy?

Posted on in Divorce

Naperville IL divorce lawyerDivorce can be a particularly expensive legal endeavor, especially for couples who already have complicated finances. When a couple or one of the spouses is struggling with debt, the costs of divorce can be incredibly difficult to bear. Many people benefit from pursuing debt relief through bankruptcy around the time of their divorce, but if this is something you are considering, you should understand how the timing of your filings can affect your finances and the divorce process.

Timing Your Divorce and Bankruptcy Filings

Some couples choose to file for bankruptcy together before beginning the divorce process. One benefit of doing so is the ability to share bankruptcy fees and costs with your spouse. Filing for bankruptcy before divorce can also help to simplify the division of marital assets and debts, especially in the case of Chapter 7 bankruptcy, through which certain assets are liquidated in exchange for the discharge of debt. Having a more clear understanding of where your finances will stand after bankruptcy can lead to a more equitable distribution.

However, there are situations in which waiting to file for bankruptcy individually after the divorce is a better option. For example, if a spouse has mostly non-marital debt, it is likely in the other spouse’s best interest to stay out of the bankruptcy process. Filing for bankruptcy separately may also be necessary to ensure that each spouse qualifies for Chapter 7 bankruptcy according to the terms of the means test. Alternatively, if you are interested in pursuing Chapter 13 bankruptcy so that you can retain more of your assets, it may be best to wait until after the divorce, as this process can last for between three and five years.

Filing for bankruptcy after the divorce is finalized may also allow you to discharge some debts related to the divorce. However, it is important to note that child support and spousal support obligations cannot be discharged in bankruptcy, nor can attorney fees for proceedings related to support orders.

Contact a DuPage County Divorce Lawyer

Financial issues, especially those involving debt, can significantly complicate the divorce process. It is important to fully consider your options before deciding how to proceed, and an experienced Naperville divorce attorney can help you to do so. At Goostree Law Group, we will help you protect your finances throughout your divorce and explore your options for debt relief, including bankruptcy if necessary. Contact us today at 630-364-4046 for a free consultation.

 

Sources:

https://www.experian.com/blogs/ask-experian/how-to-handle-bankruptcy-and-divorce-at-the-same-time/

https://www.law.cornell.edu/uscode/text/11/523

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