How Bankruptcy Can Affect the Divorce Process

Financial difficulties often go hand-in-hand with marital problems. Going through both a bankruptcy and a divorce at the same time can be an overwhelming experience, as both legal processes involve major financial and emotional transitions. Handling them together adds complexity, but effective legal guidance can help protect your interests and keep you away from potential pitfalls.

If you’re considering filing for bankruptcy while you’re ending your marriage, a threshold decision is whether to wait until your divorce is finalized to seek debt relief. By filing for bankruptcy before the divorce, you might be able to avoid difficult negotiations regarding the allocation of debts accrued during the marriage. Unsecured debts like credit card balances and personal loans can be discharged relatively quickly, which should simplify property division issues during the divorce. However, you’ll need to cooperate with your spouse during the bankruptcy process, which might not be feasible if tensions are high. 

An inability to communicate effectively is one reason why some people wait until their marriage is dissolved to file for bankruptcy. Waiting until after the divorce means that each party would be able to file based on their individual debts, including those distributed in the divorce order. Delaying might be the preferred option if you’re thinking of a Chapter 13 bankruptcy, which involves a repayment plan lasting from three to five years.  

One key issue to keep in mind is that certain financial obligations cannot be discharged in bankruptcy.  Obligations relating to spousal support (alimony) and child support orders are not subject to bankruptcy protection, meaning you will still be responsible for these payments even after completing the legal process.  

Handling both bankruptcy and divorce requires careful legal planning. Retaining a knowledgeable bankruptcy attorney, along with an experienced divorce lawyer, will help you gain an accurate perspective as how your daily life will be affected by choosing a particular option. They can help you determine the best order in which to file, advise you on joint or individual filings and assist with any complications associated with dual legal proceedings. 

Jeff Field & Associates provides comprehensive legal guidance to Georgians who are seeking debt relief through bankruptcy. We are highly experienced at handling complex situations, such as when bankruptcy occurs at the same time as a divorce or another major life event. Please call 404-381-1278 or contact us online to make an appointment. We have locations in Douglasville, Gainesville, Bogart, Lawrenceville, Marietta and Decatur.