What Are the Pros and Cons of Filing a Bankruptcy Petition First?
Because money problems are often a cause of marital strife, it’s not uncommon for a person to be involved in a bankruptcy proceeding and a divorce proceeding within months of each other, or even simultaneously. If it’s clear that your marriage has ended, but equally clear that you need to get a fresh start in bankruptcy, you may have questions about the timing of those legal actions.
Why Would You Want to File for Bankruptcy Before You File for Divorce?
There are some distinct advantages to filing for bankruptcy protection while you are still married:
- Because your petition will be a joint one, you can share both the cost of filing and the expense of a bankruptcy attorney
- If you file for protection under Chapter 7, you may have to relinquish some of your marital assets to the court in exchange for the right to permanently discharge debt. That can make the property settlement in your divorce proceeding far less complicated, as you’ll have less property in dispute and won’t have to figure out who will pay any unsecured debt.
- A prior bankruptcy filing can protect you from a creditor in the divorce proceeding. If the court orders your spouse to pay a debt as part of the property settlement, it won’t prevent a creditor from seeking to recover from you, if your name was on the obligation.
There are also some downsides to filing a bankruptcy petition before a divorce complaint:
- If you want to discharge your debts through a Chapter 7 filing, you’ll need to submit to a “means test,” to determine if you qualify. If you file for bankruptcy first, the court will use your joint income to establish eligibility. If you wait, it will be only your income.
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 Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.
