Bankruptcy and Divorce – What Should Come First?
What Are The Benefits To Filing For A Divorce Before Filing Bankruptcy Or Vice Versa?
There are certain pros and cons either way. If you file for a divorce beforehand in Florida, there may be certain amounts of debt that are in the divorce that may be in your name. For example, suppose one spouse has a credit card that they owe $20,000 and it is just in their individual name, but it is considered a marital debt. As part of the divorce agreement, they agree to be responsible for that. They may get something in return for being responsible for that and negotiating a divorce settlement. After that, they can turn around and discharge that in a bankruptcy and get rid of that obligation.
If the divorce is filed beforehand, then that enables them to go in and make certain arguments regarding responsibility for a certain debt. It is usually handled on a case by case basis depending upon what debts were there and in whose name they are in and if they are joint or separate for each individual.
There are certain times when you may want to file for bankruptcy beforehand. It may be better to get through the bankruptcy before a divorce is filed because if the parties are still married, you can do a joint bankruptcy where they both file one petition. In that case, they only pay one lawyer’s fee and one filing fee so they save quite a bit of money doing it that way. Also, looking at the divorce aspect of it, it makes things a little bit simpler because then they do not have to worry about giving up the debts in the divorce. All of that is cleaned out in the bankruptcy. In a divorce after bankruptcy, you are just talking about the assets and the children or whatever else is involved and then move along.
The other advantage to filing the bankruptcy before the divorce is that a lot of times the difficulty in the marriage is financial in nature. So if they remove that part, the people no longer have that difficulty. In some situations, the parties reconcile and do not get divorced because they have gone in and filed bankruptcy and got rid of all the debt. It takes that stress away from them and they are able to get back together and that has happened a few times.
Would Filing For Bankruptcy Before Someone Divorces Possibly Save Them Some Money?
It will save them attorney’s fees because the attorney will charge the same amount of money to one person as opposed to a joint petition. Also, the filing fee is the same for a joint petition as opposed to one person. So, it saves them one of the attorney’s fees when they both file together.
Even if they are going to get divorced, it makes the divorce simpler in most cases because it removes the debts from the equation. It makes it easier to settle the divorce and if a divorce is easier to settle, then there are less attorney’s fees that are paid, less other costs that are involved in the divorce and it is less stressful. So, it can definitely help out in that aspect.
If you are not sure whether to file for bankruptcy or go through the divorce process first, call the law offices of Michael E. Golub for a free initial consultation at(352) 290-2877 or email our Tavares office to get the information and legal answers you’re seeking. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.