Filing Bankruptcy Before Divorce
Advantages: Spouses can file jointly, splitting the cost and eliminating shared debt in one case. The household income test for Chapter 7 uses combined income, but also combined expenses (including supporting two people). Joint filing simplifies the divorce by removing debt disputes from the settlement. Disadvantages: Requires cooperation with your soon-to-be-ex. Delays the divorce process. Not practical if the relationship is hostile.
This is often the most efficient approach if both parties agree. One bankruptcy filing ($335 filing fee + attorney fees) eliminates all joint debt, leaving the divorce to address only assets, custody, and support.
Filing During Divorce
Either spouse can file bankruptcy during divorce proceedings. This triggers the automatic stay, which can temporarily halt division of marital property (though family courts can usually proceed with custody, support, and dissolution). The timing can be strategic -- a spouse facing an unfavorable property division might file bankruptcy to restructure their debts.
Filing during divorce is complex and can create conflicts between bankruptcy court and family court. Both courts have jurisdiction over the same assets and debts. Coordination is essential. You need both a bankruptcy attorney and a divorce attorney who communicate with each other.
Filing Bankruptcy After Divorce
Advantages: Each spouse files individually using their own income and expenses. Lower individual income may make it easier to qualify for Chapter 7. Each spouse claims their own exemptions. No cooperation with ex required. Disadvantages: Joint debts assigned to your ex in the divorce may still be your problem. More expensive (two separate filings instead of one joint).
If your ex was assigned joint debts in the divorce and isn't paying them, your bankruptcy can discharge your liability on those debts. This is sometimes the only practical solution when a divorce decree assigns debts to a spouse who can't or won't pay.
Frequently Asked Questions
Can we file a joint bankruptcy if we're already divorced?
No. Only married couples can file joint bankruptcy. If you're already divorced, each ex-spouse must file separately. This is one reason filing jointly before the divorce is finalized can be advantageous.
Does my ex-spouse's income count on my means test?
If you're filing individually while still married (but separating), your spouse's income is generally included in the means test calculation. However, if you're separated and maintaining separate households, you may be able to exclude their income. After divorce, only your own income counts.
Can bankruptcy stop my ex from collecting a divorce judgment?
It depends on the type of obligation. Domestic support obligations (child support, alimony) are non-dischargeable. Property settlement obligations may be dischargeable in Chapter 13 but not Chapter 7. The 523(a)(15) exception to discharge applies specifically to divorce-related debt obligations.
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