How Can I Manage Bankruptcy and Divorce at the Same Time?

 Posted on June 27, 2022 in Divorce

Couples in Texas and elsewhere across the United States frequently get divorced because of financial problems. Whether it is the stress of never having enough to make ends meet or the fiscal irresponsibility of one spouse that has driven the other spouse away, dealing with major financial crises during divorce is an exhausting and complicated endeavor. 

Perhaps no financial situation is more difficult than trying to manage bankruptcy during a Texas divorce. Unfortunately, sometimes divorce and bankruptcy unavoidably occur at the same time and spouses must then make difficult decisions about how to navigate their situation. 

Should We File for Bankruptcy Before Divorce? 

Bankruptcy is a federal process, meaning it takes precedence over divorce, which is a state process. When you file for bankruptcy, the bankruptcy court will put a stay on any creditor to prevent them from garnishing wages or collecting on debt. Because divorce involves issues related to a couple’s finances, such as dividing marital property and setting child support payments, a divorcing couple needs to get permission from a bankruptcy court to settle their financial affairs. It is generally difficult and impractical to try to remove a bankruptcy court’s stay so you can pursue a divorce during bankruptcy. 

Another advantage of filing for bankruptcy before divorce will be that your debts will be resolved before you need to negotiate them as part of the divorce process. Although you will likely have fewer assets after bankruptcy, certain marital assets - like houses, family heirlooms, or savings accounts - can be exempted during bankruptcy up to a certain amount, leaving spouses a less complex debt and asset picture to divide. 

How Do I Know Which Kind of Bankruptcy to File For? 

Whether you file for Chapter 13 or Chapter 7 bankruptcy will depend on several factors. It is imperative that you have an experienced team of financial professionals and a great divorce attorney who can give you good advice and help you make these complex decisions in a way that will benefit you now and in the future. 

Meet with a Denton, TX Divorce Lawyer

While divorce is never easy, combining it with bankruptcy can be a logistical nightmare. Fortunately, you do not have to face the unknown alone. Get help from an experienced Denton County divorce attorney with The Law Office of Linda Risinger. We can connect you with financial experts and any other professionals who can help you get through your divorce more easily. Call us today at 972-294-6533 to schedule a complimentary consultation. 

Source:

https://www.experian.com/blogs/ask-experian/how-to-handle-bankruptcy-and-divorce-at-the-same-time/