Many times, financial difficulty leads to stress in a marriage. In cases where the financial stress leads to divorce, the issues often lead to bankruptcy filings.
The question that we hear the most often from clients regarding divorce is “What should we do first – the divorce or the bankruptcy?”
There’s actually no easy answer for that question. Every situation is unique, so if you’re asking the same question, you should consult with an experienced bankruptcy attorney. Your attorney will be able to look at all the factors and suggest the route that will work best for you.
In general, if certain conditions are present, filing for joint bankruptcy before the divorce will be the fastest, most cost-effective option:
- Both spouses know that they’re going to file bankruptcy
- There are few, if any, assets that would be exempt under bankruptcy laws, so not much will be divided in the divorce
- The emotional situation isn’t so hostile that the spouses wouldn’t cooperate in a bankruptcy proceeding
If one spouse won’t agree to joint bankruptcy
If your spouse won’t agree to a joint bankruptcy, you can still file bankruptcy on your own. When your debt is discharged, the creditors would then start collection efforts for the entire debt against your spouse (since the debt is the responsibility of both spouses). (more…)