Marriages often end due to financial problems. In the event of divorce, you might also need to file for bankruptcy. However, you need to consider a few things before making a definitive decision.
According to debt.org, divorce is a rising reason for bankruptcy since 2005. If you face financial difficulties coupled with divorce, you need legal advice. See below for a few tips on navigating the complex world of both.
Chapter 7 is the fastest option
Chapter 7 bankruptcy is the best option for a fast divorce process. Chapter 13, the other common form of bankruptcy, can take multiple years to conclude. Under Chapter 7, the loaning institutions sell nonexempt property and assets to pay for the debt you owe them. According to the United States Courts, the Bankruptcy Code allows you to keep property that falls under the exempt category. Work with your attorney to determine your exempt property.
Try to file for bankruptcy first
Usually, the best option when dealing with divorce and bankruptcy is to file for bankruptcy first. This allows you to split the costs of paying off your debt. However, sometimes the combined income of you and your spouse disqualifies you from filing for Chapter 7. If you believe Chapter 7 bankruptcy is your best option, starting with a divorce might make more sense.
Remember, Chapter 7 is not a perfect solution for debt elimination. Chapter 7 cannot remove such costs as alimony, student loans, child support and attorney fees.
Bankruptcy and divorce provide enough difficulties on their own, but they often happen simultaneously. Contact an attorney today to go over your options. It is never too late to turn your financial situation around.