Is bankruptcy an option while I am going through divorce?

On Behalf of | Oct 28, 2022 | personal bankruptcy |

This may come as little surprise, but many residents of Northern Illinois face marital problems and financial problems at the same time. Many Will County residents may even attribute their divorces to money woes.

Like anyone else, people in Will County are free to file for bankruptcy right before a divorce, afterward or even while a divorce is pending. Whether and when one should do so depends on their circumstances.

Someone who is dealing with financial trouble in the midst of a divorce should consider speaking with an experienced legal professional who ideally has knowledge of both family law and bankruptcy.

There are some things to keep in mind about divorce and bankruptcy

Still, there are some general pointers people can keep in mind.

If there is still enough trust between the couple and if they can get along, it might make sense for both of them to file for bankruptcy together right before or during a divorce.

By filing jointly, the couple can take advantage of combined exemptions, giving them the right to keep more of their property.  Practically, this also makes the divorce simpler. The couple will not have to divide debts that have been discharged in bankruptcy.

On the other hand, if the couple together earns too much to qualify for the more common Chapter 7 bankruptcy, they may wish to file for bankruptcy separately rather than have to make payments in a Chapter 13 plan.

There may also be situations in which one spouse ran up a bunch of debt during the marriage. The other spouse may not wish to damage their credit by filing a joint bankruptcy.

With respect to timing, it is important for people to remember that certain debts connected with divorces, like alimony, child support and in some cases property settlements, usually are not dischargeable in bankruptcy.

Moreover, even if a person discharges other debts, it may cause complications in their divorce case down the road, especially if the debt is in the name of both spouses but the spouse filing the bankruptcy was ordered to pay it.

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