Divorce and bankruptcy are emotionally draining in their own rights, but facing both of them can be downright overwhelming in every way. If you know that filing for bankruptcy is in your future, you might be tempted to do it before the divorce or even at the same time. However, bankruptcy and divorce are both long processes, and one usually gets handled before the other.
Can you file at the same time?
Even if you file for bankruptcy at the same time as filing for divorce, the court will most likely focus on the divorce first. The process of divorce involves separating assets by analyzing joint and individual financial accounts and investments.
Bankruptcy, on the other hand, looks over all of your assets, both individual and joint, and sees what can be cleared out to pay off debts. Since assets are in the process of changing ownership during a divorce, it doesn’t make sense to handle bankruptcy and divorce at the same time.
Can you file for bankruptcy before the divorce?
When you file for bankruptcy and you are still married, it will affect not only you but also your soon-to-be ex-spouse. If your spouse files for divorce as you’re filing for bankruptcy, the court will probably handle the divorce before your bankruptcy.
The only time that it makes sense to file for bankruptcy before the divorce is if you have marital debt or joint debt with your spouse that needs to be handled. If you and your spouse were to divorce before the bankruptcy, then the debt would be divided, and you would have to each file bankruptcy individually after the divorce.
The downside to this is that it means very closely working with your spouse. However, it could be for your benefit since handling the bankruptcy first might mean you both keep a larger portion of your financial assets than if you filed bankruptcy separately.
Divorce is a messy and complicated process, made only more complicated by bankruptcy. To learn more about bankruptcy and how it might impact your divorce, reach out to a lawyer.