Sometimes couples who are clearly hostile towards each and clearly want to divorce are entangled in a web of debt. Is it in the best interest of these couples to file bankruptcy before they file for divorce? Sometimes it is in the best interests of both parties to file bankruptcy before divorcing.
First of all, when couples divorce they both often experience a significant drop in their living standards because of the cost of running two households. Because of this it can be more difficult to repay debt which can lead one or both parties to end up in financial crisis; which is not good especially if there are children. With bankruptcy, both parties can discharge their debt in a Chapter 7 bankruptcy or enter an affordable repayment plan in Chapter 13 bankruptcy leaving more assets for the divorcing parties and their children. But in the case of divorcing couples it is best to file Chapter 7 bankruptcy if possible.
If you are a couple who is considering filing bankruptcy before you divorce there are a few “rules of engagement” you should be aware of before approaching a bankruptcy attorney.
- the bankruptcy attorney has a duty to represent both party’s interests equally.
- the bankruptcy attorney cannot advise you on anything related to your divorce,
- the bankruptcy attorney can only give advice regarding your rights in regards to creditors.