Bankruptcy and Divorce – Which Should Come First?

09-Mar-2010 If you feel that your relationship is headed toward divorce and you have significant marital debt, you may be wondering which you should file for first – bankruptcy or divorce. While every situation is different, most likely it makes sense to file for bankruptcy prior to your divorce. 

Bankruptcy may simplify your divorce. If there is a substantial amount of debt between your spouse and you, filing Chapter 7 or Chapter 13 prior to your divorce will give you an idea of how your debt will be handled and which obligations might be cleared by the bankruptcy. Then when you go forward with your divorce, the division of remaining debts and property should be less complicated.

Protection from your soon-to-be-ex. Debt and divorce are tricky, and even if you are parting ways amicably, your spouse will soon be your ex. And how your ex manages his or her debt will affect you after you are no longer married because debts incurred during your marriage are still your responsibility. That means that if your spouse fails to pay their debts or files for bankruptcy and you do not, you will become liable for that debt.

Reprieve from debt collectors. Bankruptcy and divorce are very stressful, and that stress can be exacerbated by constant calls and letters from creditors. Upon filing for Chapter 7 or Chapter 13, the automatic stay will be in place and effectively eliminate those calls and letters so that you may focus on your debt and divorce.

One bankruptcy is less expensive than two. Bankruptcy and divorce filings can be expensive. If your spouse and you are able to amicably file for Chapter 7 or Chapter 13 prior to your divorce, you will prevent yourselves from spending on duplicate bankruptcy proceedings.

When considering bankruptcy and divorce, it may not make sense for you to file for bankruptcy prior to your divorce. The most obvious example is if your divorce is not amicable or if you suspect that your spouse may be hiding assets. Additionally, bankruptcy will not prevent you from having to pay child support or alimony. Likewise, filing bankruptcy will not affect your property settlement.

Every bankruptcy and divorce situation is different, and only a professional can tell you what the best solution is for your particular situation. Chang & Carlin LLP is able to provide the necessary legal experience and personal service that you deserve for your bankruptcy needs.

Chang and Carlin
The content found on the Chang & Carlin site is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney and does not create an attorney-client relationship. If you are interested in obtaining information about chapter 7 bankruptcy, chapter 13 bankruptcy, foreclosure services, real estate legal services, you are encouraged to call our law firm at 866-790-8601 or Request a Free Legal Evaluation. Chang and Carlin serves clients in Chicago, Schaumburg, Joliet, Warrenville, Waukegan, Illinois.