Going through a divorce is emotionally devastating, but it can also be financially devastating. While state laws on property division in a divorce vary, many people in Louisville find that after their divorce they own fewer assets and owe more debt than they did before getting married.
Moreover, after a divorce, a person is living on one income, rather than two. Sometimes, a single income just is not enough to make ends meet, especially if a person is paying alimony and child support. And, should a person incur an unexpected expense, such as a large medical bill or expensive car repair, it could stretch their finances to the breaking point. People in such situations may decide that their best choice is to file for personal bankruptcy. However, should one file for bankruptcy before their divorce is complete or after?
Sometimes, if one spouse is thinking of filing for bankruptcy before the divorce is final, it might actually be beneficial for the parties to jointly file for bankruptcy. This is especially true, if most of the couple's debts are jointly owned. This is because, even if only one spouse files for bankruptcy, joint debts are still the responsibility of both parties.
If the debts are extinguished through bankruptcy, then the parties do not have to deal with these debts during the property division process. Keep in mind that once the divorce is final, in general, couples can no longer file for joint bankruptcy.
Moreover, if a person is thinking of filing for bankruptcy after a divorce, they may want to keep in mind that not all debts can be extinguished through bankruptcy. These include child support debts and spousal support debts. If a person is struggling with those debts, though, filing for bankruptcy can still help. By filing for bankruptcy, a person's other debts can be extinguished, leaving more income available to cover child support and alimony payments.
In the end, deciding when to file for bankruptcy, if one is also getting a divorce is a personal decision. Some couples find that jointly filing for bankruptcy before the divorce is final works for them, while others decide to wait until their bankruptcy is final, and then one spouse or the other will file for bankruptcy on their own. A bankruptcy attorney can help people determine the best time to file for bankruptcy.
Source: womansdivorce.com, "When Divorce and Bankruptcy Collide," accessed Feb. 5, 2017