3 Questions: Bankruptcy First or Divorce First?

1. When is it more beneficial to file for a divorce before filing for bankruptcy?

Bankruptcy Attorney:  “Bankruptcy can, but doesn’t always, delay your divorce proceedings. If you and your spouse have agreed to everything, you may be able to get your divorce finalized faster than if you file for bankruptcy first. Also, if you file pre-divorce, your combined income may be too high to qualify for a ‘Chapter 7’ bankruptcy proceeding. A Chapter 7 discharges most, if not all, of your debts.

“The other concern is about the debts that you want to keep. These types of debts are typically a car loan or a mortgage. If you file to discharge all your debts other than your car and home, and later decide you cannot handle these debts, you will not be able to re-file for a number of years. If you and your spouse can only qualify for a ‘Chapter 13’ (a debt repayment plan), you would be stuck in a repayment plan with your ex-spouse for five years.”

Family Law Attorney:  “What effect then does a family law divorce Order (Final Judgment of Dissolution of Marriage) have on a divorced couple’s bankruptcy proceedings?”

Bankruptcy Lawyer:  “It would establish what assets belong to the bankruptcy debtor and what assets belong to the ex-spouse. It establishes support obligations such as alimony and child support that have high priority in various ways in a bankruptcy case. In a Chapter 13, the bankruptcy debtor (the ex-spouse) cannot get a discharge unless the debtor is current on support payments. Most importantly, the Bankruptcy court will not discharge alimony and child support obligations.”

Family Law Attorney:  “Who was the Tampa Bay Buc’s first pick this year in the draft?

Bankruptcy Attorney: Knock it off! Turn off ESPN.