Money problems can put a big strain on a marriage. If you and your spouse have decided to divorce over money, deciding when you file for bankruptcy can be a factor. You don't want to file in the middle of your divorce because this gets complicated quickly. You are already trying to figure out who is entitled to what assets and who is responsible for each debt. If you want to clear up your debt before separating, filing for bankruptcy before filing for divorce is a good option. When one of you plans to file for bankruptcy but the other isn't sure, you will have to wait until after your divorce to file for bankruptcy.
Dividing up Your Property in a Divorce
In a divorce, property is considered either separate property or marital property. Both assets and debts are looked at the same way. If you have property that is separate from your spouse, it is yours to keep. The same goes for debt in your name. If you have credit cards that only have your name on them, these are considered your debt. When you have joint debt, figuring out how to clear up this debt before you file for divorce will take some negotiation.
When You Want to File Bankruptcy Alone
If you are going to file for bankruptcy, but your ex isn't, dividing up your marital debt should be done carefully. You will want to take responsibility for the debt that you can discharge in a bankruptcy claim while leaving debt that you can't write off to your ex. If the breakup is mutual and your ex is not going to file for bankruptcy, this could go in your favor. When both of you want to file for bankruptcy after the divorce, you will end up with your fair share of debt that can be discharged and debt that can't.
Understanding Your Marital Debt
It is not possible to write off student loan debt or back taxes. You also can't discharge any back child support you owe in a bankruptcy. If your marriage mostly has credit card debt, this is going to be taken care of when you file for bankruptcy. If you owe taxes as a couple, this is considered marital debt and can be divided or assigned to one person in your divorce.
When you are struggling under a mountain of debt and want a divorce, decide how you are going to divide up your property. If you can file together before your divorce, you'll only pay one fee. When you want to file for divorce first, wait until it is over to file for bankruptcy. To learn more, reach out to a bankruptcy law firm.
Share2 May 2019
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