Many people who end up filing for bankruptcy cite their recent divorce as the primary cause. If you plan ahead, however, you may be able to save a lot of time and money. Depending on your unique situation, there may be benefits to filing bankruptcy before divorce.
Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy
If you are wanting to file bankruptcy before divorce, Chapter 7 is likely to be the better option. Chapter 7 bankruptcy typically only takes about three to four months to complete. That’s usually short enough to get done before filing divorce.
Chapter 13 on the other hand takes anywhere between three and five years. That’s a long time to wait if you want to get a divorce. Also, Chapter 7 allows you to offload most of your debt, whereas Chapter 13 bankruptcy still requires you to pay most of it off.
However, when you go to file Chapter 7 bankruptcy, you will have to include both yours and your spouse’s income. If your income is too high to file Chapter 7, then you may be forced to go for Chapter 13 instead. It may be more beneficial in this situation to file divorce first, then bankruptcy.
Benefits of Filing Bankruptcy Before Divorce
There are a few immediate benefits that you will see from filing bankruptcy before divorce, including:
- Wiping out debts makes property division simpler during divorce
- The exemption amounts will be doubled while you are still married, allowing you to protect more of your assets
- Bankruptcy fees are the same when filing jointly or individually, meaning you can split the fees
- Divorce costs may be lowered after your bankruptcy discharge
- Filing bankruptcy before divorce may prevent creditors from pursuing you for ex-spouse’s debts
More often than not, the pros of filing bankruptcy before divorce vastly outweigh the cons. Speak to an experienced bankruptcy attorney for more information.
Washington D.C. bankruptcy lawyer Kevin D. Judd has been practicing law for years, and has established himself as one of the best bankruptcy lawyers in the District of Columbia.