First Comes Divorce, Then Comes...Bankruptcy?

When it rains it pours, at least that is what we often tell ourselves when we are going through a particularly rough patch in life.  Unfortunately, many residents in Oak Park, Chicago, and throughout Illinois face difficult circumstances all at once, making it incredibly tough to understand how to proceed to break free and get a fresh start.

For example, it is quite common for a divorce and bankruptcy to coincide with one another.  This is usually the case for one of two reasons (or both).  First, the intense financial pressures themselves could cause the divorce.  Obviously fights about money are common among couples, and those fights could reach the point where the marriage ends.  Additionally, the process of going through a divorce itself can be quite expensive.  Beyond the legal fees and costs, it is simply far more expensive to live alone than as a unit.  Paying for two different places to live, multiples bills, and more can throw even previously secure individual into financial limbo.  If debts pile up, then bankruptcy may be the logical option.  

Considering that the finalization of a divorce can take some time, all of this often leads to the question: Should I file for bankruptcy before the divorce or after?

Now or Later?

This is not a question that you should push off.  That is because there are somewhat different rules for filing for a “joint bankruptcy”--where you and your soon-to-be-ex partner file bankruptcy as a single unit.  One of the key benefits is that a joint bankruptcy can eliminate various debt accumulated during the marriage itself.  This process may greatly simplify the allocation of assets during the divorce.

Similarly, filing together may alleviate some of the fear of an uncertain bankruptcy court outcome if bankruptcy is filed only by one partner after a divorce decree.  The bankruptcy court is not necessarily bound by the divorce decree, and so there is a legitimate fear that one partner may be left holding the bag on all of the debt if the other files afterwards.  It is not out of the question, for example, for debt to be split between the parties during divorce but then shifted solely onto one party after one of the partners files for bankruptcy.  The court has flexibility when making these decisions, but it is critical that local residents think through the implications.

A Fresh Start

Obviously, in our area an Oak Park bankruptcy attorney should be sought out so that you can understand exactly what the implications might be, and make informed decisions about how to proceed.

There is no getting around the fact that divorce and bankruptcy can be incredibly stressful and contentious processes in their own right.  When handled together, it is easy to feel overwhelmed.  However, at the same time, divorce and bankruptcy are similar in that they both may offer a much needed fresh start.  Beyond the negative connotations, there comes a time in many lives when it is simply time to re-work things and focus on a new direction.  Whether that is in a relationship or a financial quagmire, it is important to make clear, informed choices every step of the way.