Bankruptcy and divorce are two legal proceedings a couple hopes to never face, but sometimes, poor finances ultimately doom a marriage. When you have to deal with these two legal issues intertwined, you likely want them both handled as quickly and cost-effectively as possible. If you don’t know where to start, below are the most-asked questions about concurrent files for bankruptcy and divorce, and why you should have a lawyer guide you through the entire process.

Common Questions When Filing for Divorce & Bankruptcy Simultaneously

How can bankruptcy and divorce affect each other?

The proceedings of each respective legal issue will directly interfere with the other, so you shouldn’t file for both at the same time. The reason for this problem is your assets, or the sum of money and valued items that comprise your individual fiscal worth. Once you file for bankruptcy, an automatic stay is put in place on your assets. This freeze allows the bankruptcy court to sort out what debts you owe and what assets can help you pay for them. It also makes the division of assets—a large part of a divorce proceeding—virtually impossible since the family court isn’t able to access the specifics of the money and goods that they need to divide. To keep both painful legal affairs as brief as possible, keep them separate.  

When should you file for bankruptcy first?

Most of the time, you should file for bankruptcy first. It allows you and your spouse to share the cost of attorney and filing fees, and in certain jurisdictions, it could protect you from paying joint debt, particularly if you own a property together. These exemptions vary based on where you live, and consulting a bankruptcy lawyer can offer some much-needed clarity. Filing for bankruptcy first will also simplify the eventual divorce because your joint assets are usually divided during this first case anyways.

When should you file for divorce first?

The main case where divorce should come first is if you choose to file for chapter 7 bankruptcy, but your joint income is over the income threshold for filing. If you and your spouse’s individual incomes fall under the income threshold determined by the median income in your state, then it’s important to look into filing for divorce before filing for bankruptcy.

What’s the quickest option to get through both legal proceedings?

Filing for chapter 7 is the quickest way to a divorce because it eliminates all dischargeable debt within six months by seizing your assets to pay for it, which means less time spent settling debts before you separate. Keep in mind that alimony and child support will not be discharged in a chapter 7 case, which is another reason why you should deal with bankruptcy first. Chapter 13 bankruptcy, by comparison, will set up a three- to five- year payment plan to eliminate debt, which means you’ll have that much more time spent attached to your ex. 

Should I hire a lawyer?

While hiring an attorney will require you to spend money you don’t have, both processes are extremely detailed and can result in long, drawn-out legal battles if they aren’t handled properly. If you fail to follow the extensive rules listed in the Bankruptcy Code, like not providing the requested tax documents or not completing a mandatory credit counsel course, you could be denied debt discharge. If that bankruptcy case is drawn out, then your divorce will be too, resulting in additional pain and debt.

Divorce and bankruptcy attorneys have the detailed legal understanding that will bring in the best outcome in the shortest length of time. They will guide you through either process to assure that you get a fresh start personally and financially, making them well worth the money. 

These two legal proceedings are never easy to file, but hiring a seasoned pro in divorce and bankruptcy law will alleviate a lot of the complicated stress of these cases. Lonneman & McMahan, PLLC, has provided top-notch family law services to Hardin, LaRue, Nelson, Hart, and Grayson Counties, KY, since 1981. Their legal team specializes in both divorce and bankruptcy and will guide you through these two proceedings with the utmost respect for you during this tough situation. To learn more about the services they offer, call (270) 765-2190 or visit their website to schedule a free consultation.