Which Proceeding Should Be Initiated First?
You’re struggling to meet your financial obligations and your marriage is falling apart…it’s a fairly common occurrence. Financial difficulties are a common contributor to marital strife, and relationship woes can often take a financial toll. When it’s clear that you need the protection of the bankruptcy laws, and that your marriage cannot be salvaged, it poses an important question: which should you file first, the bankruptcy petition or the divorce complaint?
When Should You File for Bankruptcy before Filing for Divorce?
If you and your soon-to-be-ex can work cooperatively and qualify to discharge your debts in a Chapter 7 bankruptcy, it can be to everyone’s benefit to complete the bankruptcy process before you file for divorce. In a Chapter 7 proceeding, you may relinquish some of your property to the bankruptcy trustee, but you’ll also permanently rid yourselves of most debts (child support and alimony, student loans and certain taxes may not be dischargeable).
When you jointly file a Chapter 7, the bankruptcy court will look at your combined income, as well as your combined debts, to determine whether you meet the means test. However, you’ll may also be able to increase your exemptions in bankruptcy, allowing you to keep more of your property. Even if you are a non-income earning spouse, filing for Chapter 7 before your divorce can be beneficial, as it will reduce the financial obligations of the income-earning spouse, making it easier for her/him to pay alimony or child support after the divorce.
When Should You File for Divorce before Filing for Bankruptcy?
Conversely, if your joint income is too high to qualify for Chapter 7, you may consider filing for divorce first, particularly if you make significantly less than your spouse. After the divorce, your individual income may allow you to permanently discharge debts. Furthermore, if you file for divorce first, you can allocate certain assets, so that they are no longer available to the bankruptcy court in a Chapter 7.
Contact an Experienced Rockwall, TX Bankruptcy Attorney
At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.
