Should I file bankruptcy while I’m getting divorced?

On Behalf of | Jan 12, 2022 | Bankruptcy, Divorce |

Whether to file a bankruptcy immediately before or in the middle of a divorce is a decision that will depend on a number of individual circumstances.

A resident of the Pittsburgh area should speak with a professional who has experience in both bankruptcy and family law about his or her legal options.

Still, many people who are divorcing are also facing financial problems. In fact, money troubles are an oft-cited reason for divorces. It is no surprise that bankruptcy is often on the radar of one or both of the spouses who are thinking about splitting.

Some general thoughts about divorce and bankruptcy may be helpful for Pennsylvania residents who are in both marital and financial straits.

Cooperating in order to file a joint bankruptcy may help both spouses

It may be to a couple’s advantage to file for a bankruptcy jointly in order to discharge all of their combined debts.

It certainly could save a lot of time haggling about who should pay what debt after the divorce ends.

Moreover, it may give the couple the ability to protect more of their marital property by claiming the property exempt under Pennsylvania law. Exempt property may not be sold to pay off debt.

The end result is that while they still have to divide their property, the divorcing couple will have more property to divide.

On the other hand, in some cases, it might be better for a couple to file for a bankruptcy separately if they have concerns that their income is too high to qualify for a Chapter 7 bankruptcy.

Pennsylvanians should be mindful of divorce-related debts after bankruptcy

After a bankruptcy and divorce, Pennsylvania residents should keep in mind that certain divorce-related obligations, child support for example, may not be dischargeable in a bankruptcy.

Likewise, a bankruptcy will not prevent a judge from modifying a divorce decree in the future in order to make sure that both sides are getting treated fairly.

This could mean, for example, ordering a spouse who previously filed bankruptcy to reimburse the other spouse for debt the other spouse had to pay.

 

FindLaw Network