Should I get divorced before filing bankruptcy?
Divorcing residents with high debt in South Carolina must choose carefully the timing of their divorce filings relative to when they file for bankruptcy.
Many a marital disagreement has occurred over money. While this is not uncommon, for some couples in South Carolina, financial problems can mount and become so severe that the marriage is unable to survive any longer. When faced with serious debt and a failing marriage at the same time, this may force people into the decision to not only get a divorce but to file for bankruptcy as well.
Spousal cooperation for a joint bankruptcy
Careful consideration is required when deciding how to proceed. As My Horizon Today explains, knowing whether to file for bankruptcy first and then divorce or vice versa can depend on multiple factors. One of these is actually how well the spouses might be able to work together to file a joint bankruptcy.
If spouses are able to cooperate, the potential exists for a joint bankruptcy prior to a divorce. This may even simplify the divorce process by reducing the decisions that need to be made about how to split debt.
If spouses are not able to cooperate well, individual bankruptcies for one or both parties may be better.
Type of bankruptcy
The income and assets of people filing for bankruptcy will help direct the decision about whether to file for Chapter 7 or Chapter 13 bankruptcy. In a Chapter 7 plan, secured assets such as homes may be seized by creditors. Couples who do not want to lose their home may be better served by filing a Chapter 13 plan.
Because Chapter 13 plans last between 36 and 60 months, they may not be best for people who want to file jointly. This bankruptcy would link them together for that time period or force them to incur additional cost and hassle to have the bankruptcy split or closed partway through.
Solo bankruptcy prior to divorce and future credit collection
If one spouse files an individual bankruptcy while still married, the other spouse may still be liable for the debts included according to Bankrate. On the other hand, if a divorce decree assigns liability to one spouse, that person will be unable to include those debts in a subsequent bankruptcy.
The importance of proper legal guidance
Clearly there are many factors that may impact a person’s financial situation when facing both divorce and bankruptcy together. Working with an experienced attorney is always recommended for people in South Carolina who must tend to their debt relief needs while getting divorced.