Divorce and bankruptcy often go hand in hand. Although it’s sad, sometimes money problems can lead to issues which simply cannot be resolved. If debt is a major factor behind the divorce, it can be difficult to know which should come first, or if they should be occurring simultaneously. Consulting both a Minnesota bankruptcy lawyer and a divorce lawyer will let you know the specifics of what may happen in either case.
During a divorce, debts are split between the two parties. Just like their material goods, each party will come away with about half of the debt. Although some may find that with less debt and a high paying job it is easier than ever to clear debt, many find themselves floundering in debt from a divorce. Bankruptcy and divorce are often not far apart. While some couples choose to file for bankruptcy before divorcing, others simply split apart, allowing each partner to choose for themselves if they would like to file for divorce. Which one of these is better? As with many things, it depends on the situation and the people involved. There is no cookie cutter answer.
Bankruptcy Before Divorce
By declaring yourself bankrupt before divorce, you can help to prevent yourself (or your spouse) from being affected by a bankruptcy which may occur soon after the divorce is finalized. If you are planning to file for Chapter 7 bankruptcy, you may be better off simply filing before the divorce. This will allow you to separate far more easily. With current Minneapolis bankruptcy law, a Chapter 13 bankruptcy will rarely transfer from one married entity to the two separate people. This can cause even more stress in a divorce procedure which is already painful.
Bankruptcy After Divorce
Often bankruptcy does not seem necessary before a divorce. Although the family may have some debt, it may not seem insurmountable until after a long and expensive divorce and bankruptcy services may not be needed. When this happens, both parties in the divorce may be caught up in a disagreement over what the terms of the divorce were. If you are paying child support as a result of a divorce, filing for bankruptcy is unlikely to relieve you of that responsibility. Child support is the hardest debt to get wiped away. Even taxes are easier to extinguish than child support. If you used a good divorce lawyer, your ex should not be able to come after your assets when filing for bankruptcy after divorce.