Can You File for Divorce and Bankruptcy at the Same Time?

It's usually best not to file for both divorce and bankruptcy at the same time. Here's why.

by: , Attorney

While it is possible to file for divorce and bankruptcy at the same time, it can create unnecessary delays and complications in both matters. Which you should file first -- bankruptcy or divorce -- depends on your particular circumstances. But in general, it is best to wait until one matter is concluded before filing the other. Read on to learn more about why it may not be a good idea to file for divorce and bankruptcy simultaneously.

For more information on what to consider before filing for bankruptcy, see Should I File for Bankruptcy?

Disadvantages of Filing for Divorce and Bankruptcy at the Same Time

When you file for bankruptcy, almost all property you own becomes property of the bankruptcy estate. If you are in the middle of a divorce, the family court judge can’t divide and distribute your assets until your bankruptcy is completed. As a result, filing for bankruptcy during an ongoing divorce can drag it out unnecessarily. Similarly, unresolved alimony or child support issues can lead to delays in the processing of your bankruptcy case.

Should You File for Bankruptcy or Divorce First?

The answer depends on your individual circumstances. Filing a joint bankruptcy before divorce can allow you to reduce court costs and attorney fees, simplify your divorce by discharging joint debts, and protect more of your property if your state allows you to double your bankruptcy exemptions by filing jointly.

In certain situations, it can also make sense to file for divorce first and then file for bankruptcy individually. If you maintain a single household and your joint income is too high to qualify for Chapter 7 bankruptcy together, you may be able to qualify individually after setting up  separate households following the divorce. Also, if your divorce will include alimony or child support considerations, it can be helpful to have those amounts finalized before filing for bankruptcy.

To learn more, see Bankruptcy and Divorce: Which Comes First?

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