Marital problems often accompany financial ones, but there is a way to handle a bankruptcy while also facing divorce. Let’s take a look at a few things you can do to survive bankruptcy even as your marriage dissolves:
- File bankruptcy first. It’s often in the best interest of spouses to file bankruptcy before they file for divorce. Filing fees are the same for single bankruptcy petitioners as it is for joint petitioners. Also, in some states, you may be allowed to double the amount of exempt property—which in turn allows you to avoid unnecessary liquidation of your assets.
- Negotiate. Attempt to negotiate with your spouse about how to handle assets. The last thing you want is an adversarial relationship with your spouse during bankruptcy.
- Discharge as many debts as possible. One of the tricky aspects of divorce and bankruptcy is that even if you have joint credit accounts with a spouse where you are both responsible for repaying debt, if your spouse discharges their obligation in bankruptcy (in a separate case) you could be left solely liable for the debt. That’s why it’s important not to rely on any past promises your spouse made regarding debt repayment. Protect your interests by discharging any debts you can in bankruptcy, and don’t reaffirm any debts based on your spouse’s promises to take responsibility for repayment.
- Communicate with your bankruptcy attorney. If you decide to file bankruptcy with your spouse and file divorce later, let your bankruptcy attorney know about the pending divorce. This fact can have a huge impact on choosing the type of bankruptcy that’s best for you. For example, filing Chapter 13 bankruptcy with a spouse you’re planning to divorce probably isn’t a good idea.
To survive bankruptcy while going through a divorce, you must plan ahead, and when possible, negotiate with your spouse.