Personal Bankruptcy and Divorce

The prospect of filing for divorce while you are dealing with the burden of overwhelming debt can make for a very frustrating situation. If you have the option of deciding whether you’ll file for bankruptcy or divorce first, how should you decide?
No matter what kinds of questions you have about consumer debt and personal bankruptcy, the dedicated Chicago bankruptcy attorneys at the Emerson Law Firm can talk with you today.
Saving Money By Filing for Bankruptcy Before Divorce
It may very well be that you and your spouse are considering a divorce, but you are also thinking about filing for consumer bankruptcy. If you have the benefit of choosing which will come first, how should you move forward? The question is a complicated one, given that many Illinoisans report that financial problems lead to divorce, or that divorce leads to the need to file for bankruptcy. The two issues often are deeply intertwined. But let’s take a look at some of the pros and cons of filing for divorce before bankruptcy, and vice versa.
If you wait to get divorced until after you and your spouse file for personal bankruptcy, you might be able to save yourselves some money. Since you’ll only pay one bankruptcy filing fee—a married couple filing jointly will pay the same as an individual who files—it might make sense to move forward with your bankruptcy before you move forward with your divorce. Filing while you are still married can also save you the cost of two separate bankruptcy attorneys.
Additionally, if you are thinking about filing for Chapter 7 bankruptcy and liquidating non-exempt assets, you are likely to find that your divorce will move much more quickly (and will cost less in the long run). If the court doesn’t have to contend with numerous complex and varied assets during property division, you will require less of your attorney’s time.
In Illinois, couples that file for bankruptcy can double their exemptions. Some states don’t give married couples the same exemptions as two individuals (thereby making it more attractive to file for bankruptcy after divorce in order to retain more assets). lllinois bankruptcy exemptions, however, allow married couples to double the exemption amount as long as they file for a joint bankruptcy. In other words, there’s no incentive here for Chicago residents to seek bankruptcy protection after a divorce instead of beforehand.
Pros of Filing for Divorce Before Consumer Bankruptcy
If you are planning to file for Chapter 13 bankruptcy instead of Chapter 7 bankruptcy, filing for divorce first might be a good idea. Why? When you file for Chapter 13 bankruptcy, you will agree to a repayment plan that will take between three and five years to complete. That is a long time—and a complicated process—to bring into divorce proceedings.
Are you considering bankruptcy but have concerns about how it will affect your impending divorce? An experienced Oak Park bankruptcy lawyer can help. Contact us to learn more about the services we provide to clients throughout Oak Park and the greater Chicago area.
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