How Does Divorve Affect My Bankruptcy Case?

TRI Writer • April 5, 2021

Two of the most stressful (and emotionally charged) experiences people commonly endure in modern times are divorce and bankruptcy. So it’s only fair to acknowledge that dealing with both simultaneously could easily be overwhelming.

Divorce and Bankruptcy: Can They Happen Simultaneously?

While no one want to experience divorce or bankruptcy, they are now considered a fairly common occurrence. If you’re facing divorce and bankruptcy, you may take some small comfort in knowing that you aren’t the only one struggling with this type of scenario and that while it is stressful, others have made it through successfully.

Proven Strategies to Make the Process as Smooth as Possible:

While divorce and bankruptcy frequently occur “at the same time,” it’s unlikely the two separate proceedings can actually occur simultaneously. The motions may be filed at the same time, but most of the time the court will give one case or the other precedence. If both cases are pending at the same time, the bankruptcy case will usually be suspended until the divorce court completes the division of marital assets. In most cases, this means filing for divorce before filing bankruptcy makes more sense and removes some potential complications. When considering whether it is more beneficial to file divorce or bankruptcy first, you’ll need to look to your financial situation and applicable laws in your local area. However, there are some general situations in which filing bankruptcy before filing divorce could make more sense.

When Does Filing Bankruptcy Before Filing Divorce Make Sense?

It may make more sense to file bankruptcy before filing divorce is the potential doing so offers for cancelling joint marital debts. Cancelling out joint marital debts means skipping the need to divide them up as part of the divorce, and then following the division by immediately tackling the debts in two separate bankruptcies (one for each ex-spouse). Filing a joint bankruptcy does require cooperation between the two parties, but doing so can significantly streamline the divorce process, minimize legal fees associated with divorce, and avoid wasted time negotiating division of debt.

When Does It Make More Sense to File Divorce Before Filing Bankruptcy?

For many, it could be easier to pass the Chapter 7 means test after divorce. The means test, required to qualify for Chapter 7 bankruptcy filing, identifies those whose income falls below the median of their state. In households where one spouse earns the majority of the income or all the income, filing for divorce first could enable both spouses to qualify for Chapter 7 bankruptcy.

If you are dealing with debt and wondering how bankruptcy could affect your divorce, please don’t hesitate to contact Ken Rannick. Most bankruptcy offices in the Chattanooga area don’t have a single Consumer Bankruptcy Specialist on staff. Our office is the only one with two. You are in good hands with Kenneth C. Rannick P.C.

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