Can I File for Bankruptcy During My Divorce?

Dealing with a divorce is never easy, and it often puts you in a very difficult place financially. If you and your soon-to-be-ex have already started separating your incomes, you may already be operating off a budget smaller than what you’re used to. Divorce also means paying a number of legal fees. This can leave you with next to nothing, and you may begin to look at bankruptcy as an option. But can you file for bankruptcy while you’re in the process of getting divorced, and should you if it’s an option?

Try to Avoid It

Legally, you are allowed to file for bankruptcy while you’re getting divorced, but it does affect the divorce process. Both bankruptcy and divorce are major legal matters, and if at all possible, you should avoid trying to do both at once. Most people who are going to get divorced and know they will need to file bankruptcy file for bankruptcy as a couple first. Then they get divorced.

Bankruptcy Puts a Stay on Part of the Divorce Proceedings

If you file for bankruptcy during or right before you file for divorce, your divorce automatically puts a stay on your divorce proceedings related to the distribution of property and debts. That’s because the bankruptcy court now has to determine how much debt you own and how that debt can be discharged. If you’ve filed for Chapter 7 bankruptcy, any nonexempt assets may be sold to cover your debt instead of being split between the two of you.

Even if you filed for Chapter 13 bankruptcy, it will still affect your divorce. All of your property will be valued, and a repayment plan will be created. This will likely affect both of you, and you will need to have the bankruptcy court’s permission to continue dividing up your assets in the divorce.

Child Support and Custody Hearings Are Not Affected

Bankruptcy will not can any delay or other issues with custody arrangements or child support hearings. If you’ve been ordered to pay child support, you will continue to do so as normal while the bankruptcy case is going on. Likewise, custody arrangements will not be affected.

Seek Legal Advice

Overall, if you do need to file for divorce and bankruptcy close together, Chapter 7 is likely the best option because it generally only takes no more than six months to complete the process. This allows you to quickly divorce. However, before making a decision, make an appointment to speak to the legal experts at Michael F. Kanzer & Associates. As with most legal matters, every case is slightly different, so it’s important to discuss the unique particulars of your case before making a decision.

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