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Bankruptcy and Divorce

bankruptcy-and-divorce.jpgMaking clear decisions during tough times can be nearly impossible. Turning to friends, family or advisors can help you regain your focus and help you choose the best alternative. Unfortunately, there is no perfect timing for divorce, however if you also plan to file for bankruptcy, you should be extra cautious with your timing. Below you will find some information that can lead you on the correct path during a stressful time.

1. Benefits of Marriage & Bankruptcy

If you choose to file jointly as a married couple, you are able to reduce the price of filing for bankruptcy. This is due to attorneys basing their prices per case rather than per person. If you decide to divorce first, you are no longer connected by marriage. This means that when you go to file you both will have to file separately and therefore, pay separately. In the long run, divorcing before bankruptcy becomes costlier.

2. Price of Divorce

Both divorce and bankruptcy go through the process of looking at your debt, assets and property. You can decrease the price of your divorce by handling these issues beforehand. By filing for bankruptcy first, you are able to resolve the problems before dividing assets during a divorce.

3. Chapter 7 - Divorce

Filing for chapter 7 can take a few months. Nonetheless, this is a quicker process than chapter 13, which might encourage you to file for chapter 7 before getting a divorce. However, keep in mind that you must be eligible to file for chapter 7. If you decide to file jointly then your income is combined with your spouse's income during the means test. This could result in your income being too high for chapter 7. If this is the case, you may be better off filing separately and therefore divorcing before bankruptcy.

4. Chapter 13 - Divorce

Although chapter 7 is usually a quicker process, chapter 13 may be a better solution for your situation. Chapter 13 involves making payments towards your debt over a period of time, which could be a few years. In a Chapter 13, creditors do not receive interest during the repayment period and are paid their principal balance or less over the term of the plan.

5. Dividing Property

When it comes to doubling your homestead exemption during bankruptcy it depends on the state bankruptcy policies. Before deciding whether or not to filing jointly with your spouse, you should check with the rules of your state you are filing under. Depending on what your state goes by, you might find that you benefit from filing as individuals so that each of you can take the full homestead exemption.

6. Resolving Debt

Overall, resolving debt sooner rather than later is always beneficial. If you wait and decide to divorce first, you may be held liable for certain unpaid debts.

We at Timothy J. Sierra Attorney at Law would like to state that our blog posts and links, on our web page or any other social media outlet, to any other web pages are not intended for legal advice. We are not responsible for third party website information. If one is in need of legal advice please contact an attorney directly.

Source: Fresh Start Law | Bankruptcy

  • "When I first came to the decision to file for bankruptcy, I had no idea where to start. I began researching attorneys on the internet and came across the information for Tim Sierra. Since he specialized in bankruptcy and had a lot of experience......"
  • The process of going through bankruptcy could be very overwhelming but Tim made me feel at ease and I felt that my needs were being taken care of. I truly feel that he had my best interests in mind and the lines of communication were always open....
  • "I had to file a Chapter 7 bankruptcy. I didn't know anyone who could refer someone so I took a chance and just looked on the Internet. I don't remember exactly why I chose Mr. Sierra, but I am glad I did..."
  • He was honest, straightforward, and hard-working. In my case I ended up with some extenuating circumstances and he handled the matter professionally even though I'm sure the work probably exceeded what he originally felt it would be....
  • I don't ever write reviews, and I had no prior relationship with Mr. Sierra. This review is simply being written as a service to others that Mr. Sierra is an excellent attorney and should be considered for your needs if you need one....
  • "I'm very happy to have been referred to Tim for my Chapter 7 filing. He was knowledgeable in his field and very responsive in replying to any questions or concerns I had. Tim was also very accommodating with meeting times..."
  • " I recently was in need of Mr. Sierra's services and I found him to be very understanding and helpful in my particular circumstance. He met with me and explained everything in full detail and also answered every question that I had....."
  • " I recommend Timothy Sierra a loyal and dependable lawyer. When you talk to him you feel that you are with a friend or a member of your family. Timothy is able to lead you in every step of the process. Good job Timothy."
  • " Bankruptcy is a private and personally devastating life event. Timothy Sierra and his assistant, Nancy, made the process as painless as possible. They kept in close contact via phone and email so I always knew what was happening in my case...."
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