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Finding the right timing is critical when filing for divorce and bankruptcy. Depending on your situation, Chapter 7 bankruptcy lawyers in Raleigh, NC will be able to advise you whether it is best to file before or after starting divorce proceedings, and what this can mean for your finances.
How Bankruptcy Affects Divorce
Generally, bankruptcy proceedings take precedence over a divorce. The distribution of joint liabilities and assets are typically delayed until the bankruptcy is finished. As such, it is technically not feasible to do both at the same time.
Another factor is that bankruptcy deals with debts that are tied to an individual’s social security number and name. Therefore, your debts and that of your spouse will be treated differently, and this can impact the divorce process.
Lastly, bankruptcy courts view your income differently if you are divorced, separated, or married when your bankruptcy is filed. You need to determine which one makes more sense for your financial situation.
Filing for Bankruptcy Before or After Divorce: Factors to Consider
During your consultation, your bankruptcy lawyer in Raleigh, NC will talk you through several factors to help you decide when to file for bankruptcy, such as:
- Type of Bankruptcy
If you plan to file for Chapter 7 complete debt discharge, then it might be a good idea to do so before your divorce. A simple Chapter 7 can be filed and finished in several months, which will allow you and your spouse to file jointly, eliminate your debts, then begin your divorce shortly afterward.
If you would rather go for a Chapter 13, then it might be better to file after your divorce. Chapter 13 payment plans can last from three to five years. The Chapter 13 process can become more complicated if you file for divorce during this period since you need to have your bankruptcy case closed or separated before you can legally end your marriage.
- Household Income
If you are worried about lawyer and filing fees, you and your spouse can save some money by filing for joint bankruptcy. However, you need to be careful before taking this direction. If your joint household income is too high, then you may not be qualified for a Chapter 7 as opposed to having a lower income if you file alone.
- Assets
If you decide to file for joint bankruptcy, make sure to consult with a Raleigh bankruptcy attorney about protecting your conjugal assets such as your vehicle and house. There are cases when filing for joint bankruptcy can provide double exemptions. For instance, you may receive a $100, 000 exemption on your home as a single filer, but filing jointly can exempt your home by up to $200, 000.
- Relationship State
Whether you and your spouse are amicable or in hostile terms will have a significant effect on your filing. You need to make sure your spouse will cooperate at every stage, such as providing all the required documents and showing up to court, so take your relationship status into account before you decide.
Moving Forward After Bankruptcy and Divorce
Bankruptcy and divorce share a similar goal – for you to start over with a clean slate. Get your life back on track with the help of a Chapter 7 bankruptcy lawyer in Raleigh. Call Weik Law Office today at 919-845-7877 for a free consultation, and set up a time to speak with one of our friendly professionals.