When To File For Bankruptcy
Divorce and Bankruptcy Filing
Warning: Declaring bankruptcy is a serious decision and may affect your credit rating for years to come. Consider the decision carefully.
Should you file for bankruptcy if debt overwhelms you during or after your divorce? Many people do – and a growing number of them are women. More women than couples now ask the courts to declare them legally insolvent and distribute whatever property they have to their creditors. Among individuals filing, 58.2% are women, 42.8% men.
You may want to consider filing for bankruptcy if:
- You have large debts that are likely to stop accumulating.
- You can’t negotiated a good resolution with your creditors.
Ideally, you and your spouse should cooperate and file jointly before divorce.
If your spouse files for bankruptcy after a divorce has been filed but before it has concluded, the divorce court will have to wait until the bankruptcy proceedings are finished to divide marital property, but the court can still award custody, visitation, child support, alimony and even grant your divorce. If bankruptcy is filed after the final divorce judgement, the former spouse still has to pay child support and alimony if awarded.
The law offers you two choices of bankruptcy: Chapter 7, the “liquidation” chapter which lawyers call “straight bankruptcy” and Chapter 13, of “wage earner’s” chapter for individuals with regular income
You can find bankruptcy basics, including details on Chapters 7 and 13, terminology and sample forms can through the Administration Office of the US Courts, Bankruptcy Judges Division. Then discuss your situation with your lawyer.