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Bankruptcy and Divorce



If you are married and struggling financially you may be experiencing a good deal of unhappiness concerning the family finances. Debt is stressful and can eat away at a marriage.  This is extremely common and unfortunately I see a number of marriages end about the same time a bankruptcy becomes necessary. I have also seen bankruptcy have a positive effect on marriages because it generally relieves stress and gives two people the chance to interact more peaceably.

The possibility of divorce should be discussed with your bankruptcy lawyer because it can effect how the case should be handled. It can be an advantage to get one bankruptcy case filed and completed before being divorced. This will involve only one legal and filing fee and can clean the slate before any remaining debts and property are divided.

A bankruptcy filing during a divorce will impose an automatic state on the state court divorce judge preventing him or her from dividing property or assigning debt while the bankruptcy is open. A divorce court cans still decide child custody and child support while your bankruptcy is pending.

A bankruptcy filed after a divorce for one of the spouses may not rid that spouse of all of the debt that could have been cleared away had the bankruptcy come before the divorce. If you come to a lawyer as a couple this should be explained to both spouses fairly and equally by your bankruptcy lawyer. It is important that your lawyer know about any plans for divorce so that both parties can be advised fairly. If communication has completely broken down and there is a good deal of anger and suspicion, it might be best to have two separate bankruptcy lawyers look into bankruptcy for each of you separately.

It is also possible for only one person in a marriage to file for bankruptcy. This can make sense if most of the debt is the responsibility of only one of the spouses. If one spouse earns significantly more than the other, your lawyer should also least consider the possibility that the higher earning spouse may not qualify for chapter 7 bankruptcy after a divorce.
                                   
It is also important to have a divorce lawyer know a bit about bankruptcy law. The changes associated with divorce can sometimes lead to a bankruptcy for one of the divorcing parties. If a provision is not written correctly in your divorce separation agreement, then an obligation that the divorcing parties had intended to fall on one of the parties may nevertheless come back to harm the other party. Some types of marital debts are avoidable in chapter 13 bankruptcy where they are not avoidable in chapter 7 bankruptcy.

In summary your bankruptcy lawyer should know a bit about your marital plans so that both parties are treated fairly and the maximum amount of debt is cleared away so that both of you can better care for any children and move on with life after divorce.