Unfortunately, many divorces also end in bankruptcies. Most couples are unable to come out of a divorce unscathed, and many will have to file bankruptcy because their finances do not add up. This post will go over how bankruptcy and divorce interact and what it may mean for you.
If you are mutually in debt, i.e. debt acquire during the marriage, then your first thought might be to file bankruptcy first. But, that may not be true. It all depends on how much you are in debt and the nature of the debt. This post will go over the benefits of bankruptcy first.
If you file for bankruptcy first, you can share the costs. The filing fee for a single or joint bankruptcy filer is the same. Additionally, you can hire one attorney, rather than two to help you through the bankruptcy. Finally, some states allow joint filers to double their exemptions which allow you to save more of your assets from the creditors. In short, you can half the costs and in some situations double the benefits.
If you file for divorce first, it could be beneficial if combined you have a high income. Chapter 7 bankruptcy has hard income limits which you may not qualify for if you are married but you do qualify under if you are divorced.
If you are considering divorce, you should consult with an attorney beforehand. As you can see, divorce implicates far more than merely your marriage. Your entire financial future could be at stake if you do not plan accordingly. An attorney can go over the basics of divorce and what you can expect, financially, personally, and emotionally. It is difficult to conceptualize how much divorce will affect your life, therefore, a lawyer is a good guide to have.