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What You Should Know about Filing Bankruptcy and Divorce

Posted By Allmand Law Firm, PLLC || 13-Mar-2014

Bankruptcy and Divorce

There are times in which money becomes a problem for married couples looking to end their marriage, bankruptcy at some point may be something either or both spouses are considering. Some may wonder if it is best to file for one over the other while others may want to do them both at the same time just to get it over with. There are factors that should be reviewed when divorce and bankruptcy is both in the picture. Upon gaining clarity on where each spouse stands it may make things easier when moving forward. The following points can give some ideas on where to get started and issues you should review.

  • Should bankruptcy or divorce be filed first? You should consider reviewing debt obligations between each spouse while understanding the significance of how bankruptcy can help if this is viable solution.

  • Think about assets and property and whether they can be divided and/or protected.

  • Each spouse can file their own bankruptcy; meaning, you don't have to file a joint bankruptcy unless it is recommended by your attorney. In some cases this depends on who is liable for debt obligations included in the filing. When spouses share liability for debt they may need to file a joint petition in order to keep creditors from pursuing either party.

  • Consider possibilities of what may happen if one spouse decides to file for bankruptcy during divorce proceedings. In bankruptcy the automatic stay helps stop any form of legal collection for the person who filed a petition. In some cases this can affect a pending divorce and how it proceeds forward.

  • Consider what may happen if an ex-spouse decides to file bankruptcy after divorce has been finalized. This could affect the outcome of who is liable for debt obligations stated in the divorce decree. Certain debts such as alimony (spousal support) or child support may not qualify for discharge.

  • Due to potential areas of complexity with divorce and bankruptcy it is imperative to discuss your situation with a qualified divorce and/or bankruptcy attorney.

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