Bankruptcy and Divorce: Which Should Come First?

When you are considering the possibility of filing for divorce around the same time you are thinking about filing for consumer bankruptcy, it is critical to seek advice from an Oak Park bankruptcy attorney about your situation. Depending upon your circumstances, filing for divorce before you file for bankruptcy could complicate your circumstances immensely, and vice versa. To be clear, there are some situations in which filing for bankruptcy before divorce makes the most sense, while there are also situations in which filing for bankruptcy after divorce will make the most sense. How can you know what you should do?

The best way to know for certain whether you should file a petition for bankruptcy before or after you get started on a divorce case is to seek advice from a bankruptcy lawyer. In the meantime, the following information can help you to understand when bankruptcy should come before divorce and when it should come afterward.

Chapter 7 Bankruptcy Usually Should Happen Before You File for Divorce

If you are considering divorce and Chapter 7 bankruptcy, it is likely in your best interest to file for bankruptcy first, especially if both you and your spouse are planning to file for bankruptcy. Since all non-exempt assets will be liquidated in your Chapter 7 bankruptcy case according to the U.S. Bankruptcy Code and remaining eligible debts will be discharged, none of those assets or debts will need to be divided in your divorce case. Accordingly, your divorce case is likely to go much more quickly, and may end up costing significantly less money.

Chapter 13 Bankruptcy Should Typically Occur After Divorce if You Plan to Divorce Soon

If both you and your spouse are planning to file for Chapter 13 bankruptcy, it is almost always a good idea to file for divorce before bankruptcy, and to then go through the Chapter 13 bankruptcy process once your divorce is finalized. Since Chapter 13 bankruptcy involves a reorganization of debts and a repayment plan that lasts three to five years, your divorce case either will be much more complicated than it needs to be, or you will need to remain with your spouse until the Chapter 13 case is completed. If you file for divorce first and have your divorce finalized, then you can each file for Chapter 13 bankruptcy individually based on the marital assets and debts distributed to you in the divorce.

Filing for Bankruptcy Individually or as a Couple

Whether you are planning to file for bankruptcy individually with separate property or as a couple with marital property will also affect the timing for your bankruptcy and divorce filings, as we suggested above. A bankruptcy lawyer can provide you with more information.

Contact an Oak Park Bankruptcy Lawyer Today

Whether you are planning to file for divorce and have questions about consumer bankruptcy, or you need assistance thinking through the complexities of filing for both divorce and bankruptcy, one of our dedicated Oak Park consumer bankruptcy attorneys can speak with you today. Contact the Emerson Law Firm for more information.


See Related Blog Posts:

Understanding Bankruptcy Chapters for Individuals

When Should a Consumer File for Chapter 11 Bankruptcy?

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