How Do Bankruptcy and Divorce Intersect?

The timing and outcome of divorce could impact your bankruptcy, and vice versa.

Are you considering both a divorce and a bankruptcy filing? Are you confused about which one you should file first? Do you have questions about how best to proceed with both ending your marriage and getting the debt relief you need? If so, then you should read on for more information about the interplay between bankruptcy and divorce.

Which should come first? It depends.

Whether the bankruptcy filing should come before the divorce - or vice versa - isn't a "one size fits all" proposition. For some people, it will make more sense to file bankruptcy through Chapter 7 or Chapter 13 prior to the divorce because that route will give them the best debt relief options. For others, the opposite is true. Before determining if divorce or bankruptcy should be filed first, you need to consider several important points.

First, you need to think about the types of and amounts of debt you have. Does the debt mostly belong to one spouse? Does that spouse also have the higher income? How much debt is there? Is a bankruptcy filing really the best way to proceed, or are there better debt relief options? If, for example, one spouse has all the credit cards, the marital home and several vehicles all titled in his or her name, and he or she also has the only income, then a joint bankruptcy filing before the marriage ends might not make sense unless higher marital asset exemptions are necessary.

You also should consider how assets and debts are likely to be divided in a divorce. This might influence both the timing of the bankruptcy filing and the type of relief sought. If you know that you won't be receiving any of the marital debts in a divorce proceeding, then you might not need to file for bankruptcy. In that case, it could make more sense to divorce first, and then let your spouse file bankruptcy afterwards.

In addition, you should think about how quickly you want the divorce resolved. If Chapter 7 bankruptcy is selected - and you are eligible to file under the means test - then it can usually be filed before a divorce because these cases move much more quickly. Chapter 13 bankruptcy cases are based upon a debt repayment plan that lasts between three and five years, however, and they will need to be resolved before a divorce can be finalized. Do you want to wait that long to be divorced?

Clearly, there are many individual considerations that must be weighed when both bankruptcy and divorce are on the proverbial table. To learn more about the interplay of divorce and bankruptcy - and what options are best for you to end your marriage while still getting the debt relief you need - contact an attorney experienced in handling these complex cases. In the Memphis area, call the law office of Ben Sissman, Attorney at Law at 901-730-4958 or 866-788-0394, or send him an email.