Debt And Divorce: When Is It Best To File Bankruptcy?

4 April 2017
 Categories: Law, Blog

In order to fully sort out the finances during a divorce, it is sometimes necessary for one or both partners to file for bankruptcy. However, you will need to question whether or not it is wise to file for both divorce and bankruptcy at the same time. The answer will be different for each situation. It is largely based on how much money you owe, the type of debt you have, and the type of bankruptcy you plan to file. The following can be helpful when making this important decision:


When filing bankruptcy, you will have to include any jointly owned property in the filing. Filing before a divorce will require you to have the adequate exemptions from the state in order to help protect your property. An exemption determines how much of your property you will be allowed to retain during the bankruptcy. Filing jointly for bankruptcy can potentially double the amount of exemptions available to you so that you and your ex-spouse will have twice the amount of protection for your property.

If you have no jointly owned property or your state does not allow as many exemptions to help provide you with double the protection of property, filing after the divorce is settled is ideal.

Type Of Bankruptcy

You should also decide on the type of bankruptcy you intend to file, as it can have an impact on your decision. You will choose between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 will get rid of all allowable unsecured debt. This form of bankruptcy is fairly easy to deal with and can easily be settled before finalizing a divorce.

Chapter 13 is more complicated. It can take several years because it requires repayment of debt on a scheduled payment plan. Due to the fact that it can be very complicated process and is very lengthy, it is best to file after the divorce.

Repayment Of Debts

Another factor that can determine when to file for bankruptcy is who will be repaying what portions of the debt. It will have to be firmly agreed upon as to who will be responsible for different debts in the divorce filing. Litigating who will pay what debts during a divorce can be very time consuming and often problematic. If one person fails to pay his or her debt, the creditor can pursue the other person for the balance. To safeguard each person in the former relationship, getting rid of debt in bankruptcy before the divorce may be very helpful. For more advice, talk to a divorce lawyer. You can find one by visiting a site like