Filing for Bankruptcy and Divorce: What to Do
Individuals and spouses file for bankruptcy and divorce for numerous reasons. They could even file for divorce after filing for bankruptcy, or vice versa. In both cases, the details can become increasingly complex that send both parties into debt, only adding extra stress on top of a failing marriage.
For example, a marriage can fail because one spouse incurs too many expenses, plunging both partners into the depths of bankruptcy. Or, one or both partners must file for bankruptcy after filing for divorce because the expenses have become too significant for either party to handle.
In either situation, a bankruptcy attorney must analyze all cases that involve a pending or recent divorce. However, here you can learn how to proceed in a bankruptcy case after filing for divorce in addition to how to proceed in a divorce case after filing for bankruptcy. However, it is important to keep in mind that the topics covered in this blog are general and are not to be taken as legal advice for a unique situation, rather, they are only thoughts to consider.
What Should I Do First? Bankruptcy or Divorce?
One of the most common questions asked by many clients is, “Should I file for bankruptcy or divorce first?” The answer, unfortunately, will always depend on your individual situation.
The first step in deciding which to file for first is to meet with an experienced attorney. It would be most helpful to find one that can handle both cases to avoid coordinating with separate lawyers. Just make sure that they are informed of all details and understand your situation so they can determine the best option for you. It is also important to remember that any changes in a divorce case may also change the conditions of a bankruptcy. Either way, your attorney will be able to help you.
If your spouse is not willing to agree on the equal separation of debts and assets, it is best to speak with your divorce attorney (or attorney that is qualified to handle both cases). This way you will be properly prepared for all contests made by your spouse during the hearings.
Filing for Single or Joint Bankruptcy
Another common question asked by many clients is, “Should we file for bankruptcy separately or together?” Unfortunately, the answer will also depend on the situation of each individual. To make matters more complicated, one spouse may want to file jointly while the other will want to file separately.
Of course, the last thing a divorcing couple will want to do is create additional ties to each other; however, the advantages of doing so can actually outweigh the disadvantages for both parties. In some cases, this is the best option before a divorce because it will save both time and money in attorney and court fees. While filing jointly costs about the same as filing separately, it will also disallow creditors from collecting from both parties, eliminating the debt entirely. However, this can only be possible if both spouses are willing to agree on the conditions of the type of bankruptcy for which they want to file.
How Will the Property, Assets, and Debts be Divided?
Another common concern for many clients is “How will our property, assets, and debts be divided?” This will ultimately depend on the terms of the divorce. When a final decree of divorce is established, this will include the division of each asset and debt. If a joint debt was filed for a particular asset, such as a car or credit card, the decree will state which party is responsible for each debt.
However, it is always important to remember that a debt collector may collect from a divorced spouse for a debt that was incurred on the other party (as a result of their lack of payment), due to the joint debt that was filed. When this happens, the spouse who is no longer responsible for the debt of the other party has the right to have it discharge it onto the other person. In addition, they would be responsible for the damages, court fees, and attorney costs that were incurred at the time.
A common example of this situation can include a divorced couple with their assets and debts already divided. If a credit card collector is not able to reach the individual responsible for that debt, they will then contact the other individual, as they had agreed to file jointly at the time of their marriage. The individual who is no longer responsible for the debt is able to discharge it on to the other party and have them pay for all legal fees involved.
To avoid this problem, just remember to pay all debts for which you are responsible, as stated on your final decree of divorce. But when meeting with your bankruptcy or divorce lawyer, bring a copy of this document with you so they can assess your situation before filing for bankruptcy.
What to Remember
While it is common for spouses to file for divorce after bankruptcy, and vice versa, it is crucial for them to speak with a divorce and bankruptcy attorney (preferably one specialized in both areas). If you are filing for bankruptcy, be sure to mention your divorce as it will have a significant impact on the bankruptcy process. This is also true for those filing for divorce to mention their bankruptcy. In either situation, the process will run much smoother after a qualified attorney is involved early in the process of both cases.
If you live in the Oak Lawn, IL area and are looking for a qualified attorney with experience in both bankruptcy and divorce law, contact Berry K. Tucker & Associates, Ltd. Their attorneys have over 50 years of combined legal experience and will guide you through both cases to establish a solution that works in your best interest.