Divorcing With Debt: Coordinating With Bankruptcy
Generally speaking, it makes a lot of sense to file a joint bankruptcy prior to filing for a divorce because, in most cases, filing bankruptcy first will prevent the divorce court from entering orders that might be nondischargeable later in a Chapter 7 bankruptcy. (See § 523(a) (5) & (15)). In addition, by filing a joint bankruptcy prior to finalizing the divorce, the marital debts are discharged, and allocating debts during the property settlement is avoided. Moreover, the debtors can save money on attorney fees and their income levels can be higher by filing jointly to do a Chapter 7.
Conversely, if a divorce is finalized prior to filing bankruptcy, ex-spouses cannot file jointly, and more importantly, assigned debts may become nondischargeable in the context of a Chapter 7 bankruptcy proceeding. Moreover, their single filing may exceed the income levels to do a Chapter 7. A Chapter 7 discharge does not eliminate obligations of a divorce decree or separation agreement. A Chapter 13, however, may discharge some domestic support obligations.
Nothing Substitutes Experienced Advice On How Bankruptcy And Divorce Work
It is important to consult with an attorney who is experienced in both the divorce and bankruptcy laws to fully advise you of the proper course of action in your particular circumstances. I have more than 25 years of experience helping clients in Staten Island and the surrounding areas who are going through divorce — 25 years of experience I will put to work for you.
Call 718-720-1000 or contact my firm online to schedule a free consultation with me, attorney Kurt T. Richards.