Finances are certainly an area of conflict and stress for many couples. Some people find themselves in difficult circumstances and realize that bankruptcy might be the best option. You may wonder whether you can file bankruptcy as part of the divorce
process. Actually, the two legal proceedings are best kept separate. If you try to incorporate bankruptcy into the divorce, it will likely complicate and lengthen the process. There are some things to keep in mind if you are considering filing for both divorce and bankruptcy.
Types of Bankruptcy
There are two main types of consumer bankruptcy, including Chapter 7 and Chapter 13. If you plan to file a simple Chapter 7 bankruptcy, it may be best to file it before you file for divorce. Chapter 7 bankruptcy takes just a few months to complete and so you can usually get it done and out of the way before your divorce. This allows you to file joint bankruptcy, discharge your debts and file for divorce once this process is complete.
Chapter 13 bankruptcy takes longer – generally three to five years to complete. This lengthy process could certainly hold up your divorce or make it much more complicated. If you want to divorce during bankruptcy you will need to close the bankruptcy or separate it once you and your spouse divorce. Whether you should file bankruptcy or divorce first is a choice that you can make based on your personal circumstances. An experienced bankruptcy attorney will answer your questions to help you make the best decision in your case.
There are some other things to keep in mind when you decide whether to file for bankruptcy or divorce first. Your income is a consideration in the decision. If you file bankruptcy jointly before you divorce, you can save money on attorney and filing
fees. But, if your combined income is too high, you may not qualify for Chapter 7. You will also want to protect as many of your assets as possible. When you file joint bankruptcy, you have more allowances for exemptions. This could allow you to retain possession of more of your belongings and particularly, your home.
It is important to keep in mind that when you divorce, you are obligated to specific debt payment. These obligations cannot be discharged under a bankruptcy action. Therefore, you must be especially aware of the obligations that you make as part of a divorce agreement because they will impact your later bankruptcy filing. If you are on good terms with your spouse, you may be able to successfully navigate a bankruptcy filing prior to your divorce. Everyone’s situation is different, and many spouses are on less than amicable terms. It is best to have a Wisconsin bankruptcy attorney review the details of your case before you make a decision on how to proceed.
Your attorney will advise you of your options and give you the pros and cons of each particular choice. You and your spouse can then make this important decision that will impact your finances for years to come. When you need help with bankruptcy and divorce, contact our skilled legal team at Moen Sheehan Meyer, Ltd. to discuss your case.