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How bankruptcy and divorce become intertwined

On Behalf of | Dec 16, 2022 | Bankruptcy

Divorce and bankruptcy are two of the most challenging life events that anyone can experience. Unfortunately, they often go hand-in-hand. When couples face financial hardship, it can strain their marriage tremendously, leading to divorce.

On the other hand, divorce can also lead to financial hardship, which can result in bankruptcy. When couples face financial problems, they must understand the implications of bankruptcy and divorce.

Providing a fresh start

Bankruptcy is a legal process that allows individuals to discharge their debts and get a fresh start financially. It can be a complex process but can provide much-needed relief from overwhelming debt.

Divorce, on the other hand, is a legal proceeding that allows couples to end their marriage and divide their assets. Divorces sometimes emotionally and financially drain those involved but can also provide a fresh start for both parties.

How the processes relate

Filing for bankruptcy before the court finalizes the divorce can have serious implications for both parties. Bankruptcy can affect the division of assets in a divorce. In some cases, filing for bankruptcy can delay the divorce process. Creditors may need payment before the divorce becomes final, or in the case of Chapter 13 bankruptcy filings, the shared repayment plan takes three to five years to complete.

Divorce can also have an impact on bankruptcy. Divorcing couples may need to file for bankruptcy after their divorce becomes final to discharge their debts.

When couples face financial hardship, it is important to understand how bankruptcy and divorce can affect each other.