Should You File Bankruptcy Before or After Divorce?

Divorces can be emotionally and financially exhausting. For couples struggling with debt, the process can get even more complicated. When your marriage is on the rocks and you’re facing financial hardship, declaring bankruptcy could be a smart decision to get back on track with your finances.

But what if you’re also considering a divorce? Should you file for bankruptcy before or after divorce?

Here’s what you need to know.

Timing of Your Divorce

Timing is everything when it comes to divorce and bankruptcy. If your divorce is amicable and you and your spouse are willing to work together, it may be more advantageous to file for bankruptcy jointly before filing for divorce.

However, if your separation is contentious and dealing with debt could further complicate your split, it may be better to wait until after your divorce to declare bankruptcy.

Assets and Debts

Your assets and debts could also determine the best time to declare bankruptcy or file for divorce. If a significant part of your marital debt is secured, or if you have shared assets that make it difficult to allocate the debt effectively, you should consider filing for bankruptcy before divorce.

On the other hand, if most of the debt is not secured, you may want to avoid bankruptcy and try to reach an agreement with your spouse to pay off the debt as part of your divorce settlement.

Your State’s Divorce and Bankruptcy Laws

The laws governing divorce and bankruptcy vary by state. Depending on where you live, state laws might impact your decision on whether to file for bankruptcy before or after divorce.

For instance, some states allow couples to double their exemptions by filing a joint bankruptcy, while others don’t allow it. It’s essential to understand your state laws, consult with legal and financial professionals and get guidance on how they might impact your situation.

Financial Impact on Your Post-Divorce Life

It’s also essential to consider the post-divorce financial repercussions of both bankruptcy and divorce. When you file for bankruptcy before divorce, you’ll likely be able to discharge most of your shared debt, putting you in a better financial position afterward. Filing for divorce first could lead to continued financial hardship for both parties.

That said, if you’re not in dire need of relief, it may be better to wait for your divorce to be finalized before filing, especially if it could affect child support or spousal maintenance payments.

Emotional Factors

Finally, it’s hard to ignore the emotional component that comes with dealing with debt and divorce. The choice between bankruptcy and divorce is rarely straightforward. Often, both are a reality and it’s just a matter of timing.

It’s crucial to weigh the emotional consequences of each option carefully. While filing for bankruptcy before a divorce could make the divorce process go smoother and cleaner, the stigma of bankruptcy could make the experience more difficult to bear.

Should You File for Bankruptcy Before or After Divorce?

Deciding whether to file for bankruptcy before or after divorce can be daunting. However, you don’t have to decide alone. Seeking expert advice from a financial advisor and lawyer can help you make an informed decision that works best for your situation.

For more information or to schedule a consultation to discuss the timing of filing for bankruptcy, contact R. Flay Cabiness, II, P.C. at (912) 417-5041 (Brunswick, GA); (912) 809-2141 (Hazlehurst, GA) or; (912) 324-3176 (Jesup, GA) to schedule a consultation.