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Should You File for Bankruptcy During a Divorce?

Aug. 31, 2022

When couples get divorced, financial and money problems are a leading cause, according to a 2018 survey. So it’s not surprising that many couples getting divorced may also need to file for Chapter 7 or Chapter 13 bankruptcy.  

Filing for bankruptcy is a fresh start and often beneficial. But when divorce is also in play, there are many legal considerations. If you are filing for divorce and want to declare bankruptcy, it’s critical to time everything correctly.  

Below are some advantages and disadvantages of filing for bankruptcy before, during, and after a divorce. Contact St. Louis bankruptcy attorney AKS Law at (314) 740-2989 if you have questions.  

Filing Before a Divorce 

The first option is to file for bankruptcy before your divorce. Filing for bankruptcy when you’re still married, you and your partner only need to pay a single filing fee. Also, both spouses can use the same bankruptcy attorney and split the costs.  

Filing before your divorce also can make it easier to divide your property during the divorce. Typically, the family law court will divide your assets and liability. However, if you and your partner have a bankruptcy discharge of debts, you don’t have to make payments after receiving it. So, the court doesn’t have to divide the debts, which saves time.  

However, if you need to file for Chapter 13 bankruptcy, it may be best to wait until the divorce is final. This type of bankruptcy involves setting up a payment plan that lasts three to five years. Therefore, if you file before the divorce, it will be years before the shared repayment plan is done.  

Filing at the Same Time  

Many attorneys do not advise clients to file for bankruptcy while going through a divorce. As a result, the bankruptcy and divorce cases affect each other, possibly causing frustrating delays.  

When filing for bankruptcy, all non-exempt assets are part of the bankruptcy. So, the judge can’t divide the marital assets until the bankruptcy is finalized or until a Motion for Relief is granted from the bankruptcy court allowing the divorce to proceed. If there is child support and alimony, these also can slow the bankruptcy case.  

Filing After the Divorce  

Many couples choose to file for divorce, then file for bankruptcy later. Doing so can be the way to go if you want to file for Chapter 13 bankruptcy so you can keep more of your assets. It also can be advantageous if you can’t qualify for Chapter 7 because you earn too much income.  

If you and your spouse both want to file for bankruptcy, waiting until after the divorce has disadvantages. Each partner will need to pay a separate bankruptcy filing fee. So, you’ll pay more in attorney costs.  

Also, waiting until the divorce is complete to file for bankruptcy can help if the couple can’t get along. For example, when a divorce is messy and full of conflict, you might want to wait until the divorce is done to file for bankruptcy.  

Further, filing for bankruptcy after the divorce can help if your combined income is too high to qualify for Chapter 7 bankruptcy.  

There are many things to consider when filing for divorce and bankruptcy. First, it’s best to have your case reviewed by an experienced St. Louis bankruptcy lawyer.  

Contact a St. Louis Bankruptcy Attorney Today  

Do you need to file for bankruptcy and divorce? A St. Louis bankruptcy attorney can help you understand your options and next steps. AKS Law has more than 10 years of assisting people with their bankruptcy. Call (314) 866-3955 for a complimentary consultation.