Debt and financial instability can impact all facets of your life, and
can play a role in adding stress to an already rocky relationship. As
such, it is not uncommon for financial turbulence to complicate a divorce
After all, married couples typically intertwine their finances and enter
into financial obligations they may not always be able to keep. Whatever
the situation may be, and whatever the reason behind a divorce, there
are a few unique issues and options to consider when bankruptcy and divorce coincide.
At Allmand Law Firm PLLC, our Dallas bankruptcy lawyers have helped individuals
and families throughout the Dallas – Fort Worth area address all
of their debt and financial concerns. Because these are personal matters,
we often work with spouses who are considering, initiating, or in the
midst of a divorce. Because we provide comprehensive service to our clients,
we always make it a point to openly discuss their questions and concerns
about how divorce can impact their bankruptcy, and what steps are most
appropriate for them to take based on their unique circumstances.
When it comes to Chapter 7 bankruptcy, or liquidation bankruptcy, the bankruptcy process can be completed in
a much shorter amount of time than in Chapter 13. Because Chapter 7 can be filed and completed in a matter of months, it
is important to consider the benefits of delaying a divorce, filing jointly,
getting a debt discharge, and then initiating the divorce process. Doing
so can help both spouses obtain a financial fresh start as they begin
their new lives.
Other important factors to consider:
- Household income – Filing bankruptcy jointly while married can save money when it
comes to filing fees and attorney fees. However, filing jointly will mean
that your income is higher than if you filed independently. When your
income exceeds the limits for qualifying for Chapter 7 (the median monthly
income in Texas), it may prevent you and your spouse from filing for Chapter
7. Should this be the case, it may be wise to wait until after a divorce
if it means qualifying for Chapter 7.
- Property and assets – Because married couples have community property and assets, it
is important to consider how they will be protected if Chapter 7 bankruptcy
is filed jointly before a divorce. In some cases, spouses may be able
to benefit from double exemptions, and this option can be evaluated for
its benefits in your particular situation.
- Your relationship – Divorce is a personal decision between two people, and it will
have the greatest impact on your decision making process. If spouses can
communicate effectively and weigh their options for filing jointly after
the bankruptcy process has been completed, they may benefit from the debt
discharge and other factors. However, rocky relationships could make things
complicated, especially if one spouse is hostile and refuses to cooperate.
Understanding the nature of your relationship and how it may affect the
process is critical to helping you make a decision about whether or not
you should wait to file divorce.
- Divorce during bankruptcy – A joint bankruptcy, which can only be filed by spouses, is two
bankruptcy filings merged into one. If the bankruptcy process has already
been initiated and a married couple chooses to divorce, they do have the
option of separating their cases. This can be done by filing a motion
to “deconsolidate” the bankruptcy, which will allow each partner
to make independent decisions about the course of their case. Still, deconsolidating
a divorce may not always be the best option, which is why it is important
to consult a qualified bankruptcy lawyer.
All relationships are unique, and every financial situation is different.
Because of this, it is essential to personally evaluate your situation,
available options, and how they may benefit you and your spouse should
you choose to wait to file a divorce until after bankruptcy, or initiate
a divorce before or during the process. Our attorneys at Allmand Law Firm,
PLLC can work closely with you and your spouse to evaluate all of your
available options with your unique situation, needs, and goals in mind.
We can then provide the insight and counsel you need to make an informed
decision, and deliver the support and representation to guide you swiftly
and successfully through your bankruptcy journey.
To discuss your situation personally with a member of our legal team, do
not hesitate to request a FREE financial empowerment session.
Contact us today to get started.