First Comes Divorce, Then Comes Bankruptcy?

Nobody plans on filing for divorce, let alone bankruptcy, unfortunately these two events occasionally go hand-in-hand. Considered to be one of the leading causes of filing for bankruptcy, divorce is an emotionally tolling circumstance that when paired with bankruptcy, can lead to one of the most stressful times in someone’s life. If you foresee bankruptcy occurring as part of your divorce or if you and your ex-spouse are filing for both, there are some essential factors to consider before you do. One of the most critical decisions you can make for yourself is choosing an experienced Collier county bankruptcy attorney to represent you. In the meantime, feel free to review the following information regarding divorce and bankruptcy.

Bankruptcy & Divorce: Which Do You File First?

To save your sanity, one of the best things you can do is to wait to file bankruptcy in Collier after you’ve filed for divorce or vice versa. Don’t file both at the same time! Both legal processes are time consuming, mentally straining, and expensive; there is no need to file both simultaneously. According to Divorce Magazine, people usually choose to file bankruptcy before filing for divorce. There are a multitude of reasons for this which include, but are not limited to:

  • Automatic Stay – Once bankruptcy is filed (Chapter 13 or Chapter 7) an automatic stay prevents creditors from taking action against you and the assets you own. This can even aid in delaying a foreclosure if you are currently facing one.
  • Splitting up Assets – One of the major components of divorce is the process of dividing assets. If you have filed for bankruptcy and the two happen to overlap, the divorce process will take much longer than it would have if you had waited to file. So before filing make sure the two cases will not overlap.

However, some people choose to file bankruptcy before filing divorce, both of which are viable routes. Many times a couple will file jointly using a Collier bankruptcy attorney to save money. For example if you were to file separately, each of you would be required to pay the filing fees, which are $335 for Chapter 7 and $310 for Chapter 13, respectively. The real savings comes from Collier bankruptcy attorney fees, which will double if you file separately.

Since both divorce and bankruptcy are not one-size-fits-all legal cases, it’s important do discuss your options with a knowledgeable bankruptcy attorney in Collier county who has experience working with both bankruptcy and divorce.

What Type of Bankruptcy Should I File?

If you’re looking for a speedier divorce and/or bankruptcy period, choose Chapter 7 bankruptcy in Collier. Chapter 7 is an exceptional option as it typically takes anywhere from three to six months to eliminate all eligible debt. In contrast, Chapter 13 designs a 3-5 year repayment plan for the bankruptcy filer. Ideally, Chapter 7 is the best bet, but if your already in the process of a Chapter 13 bankruptcy and choose to file for divorce you have a couple different options.

In the event of filing for divorce during a Chapter 13 bankruptcy, you have the option to either restructure or even cancel your current bankruptcy plan.

Restructuring your plan means dividing the bankruptcy case into two. Canceling halts the agreed repayment plan, but you still have all the debt of both yourself and your spouse. If handled incorrectly, these complex cases can become tedious and lengthy, lasting for years. An initial consultation with your Collier bankruptcy attorney will provide you with the answers on which course of action to follow.

Bankruptcy, Divorce & Debts

One thing that many couples do before actively pursuing bankruptcy is to try and remove some of their debts before filing bankruptcy and/or divorce. This helps to clear away some of the property and asset loss that can occur during both divorce and bankruptcy in Collier. However it’s important to understand that not all debts can be removed by way of bankruptcy. This is especially true for debts associated with divorce such as alimony or child support. According to Divorce Magazine, debts that are categorized as “non dischargeable” do not have the option to be removed in the bankruptcy process, meaning you are still responsible to pay these debts, the aforementioned debts include:

  • Alimony
  • Child support
  • Fines owed to government agencies
  • Student loans
  • Court fines and/or penalties
  • Attorney fees for child custody or support cases

In Chapter 7 bankruptcy, debts that are considered dis-chargeable are a privilege rather than a right in court. For all intents and purposes this means that the person or persons filing bankruptcy must follow the rules and code of conduct set by the Bankruptcy Code in order for the court to approve a discharge. For example, if the debtor breaks or fails to adhere to the following, they may forego the “privilege” of dis-chargeable debts:

  • Failure to complete credit counseling course
  • Hides property with the intent of defrauding creditors or bankruptcy court
  • Destroys any type of financial book or record
  • Commits perjury in the bankruptcy case
  • Failure to provide requested tax documents
  • Violates a court order

Hire a Collier Bankruptcy Attorney

If you find yourself in the position of needing to file for bankruptcy in Collier county, you need to contact a bankruptcy attorney as soon as possible. This is especially prudent if you are also considering petitioning for divorce. Both bankruptcy and divorce legal procedures are complex and confusing, so hiring an attorney who is well versed in this type of situation is your best bet towards a positive outcome once the process is over. It’s important to consider all of your options before making any decisions. Miller, Hollander & Jeda, bankruptcy attorneys in Collier can help make the decision process easier. Schedule a free initial consultation today, to find out how we can best help you.