It’s not uncommon for someone filing for divorce to also declare bankruptcy. After all, many couples end their marriages over financial disputes, and both parties may want a clean slate if they accumulated a lot of debt over the course of their relationship. A bankruptcy lawyer can evaluate your specific situation and advise you on the best way to proceed, but it’s still important to have a basic understanding of how divorce can affect your bankruptcy petition.

Declaring Bankruptcy First

Declaring bankruptcy first will simplify the divorce proceedings considerably because it will eliminate various debts that neither party wants to take on alone. As long as you and your spouse are on relatively good terms, discharging debt as a couple will allow you to maximize exemptions. And depending on the circumstances, jointly filing can make it easier to qualify for chapter 7, which has strict income requirements for individuals. If one of you earns a lot more than the other, for example, both may qualify together, even if the higher earner would not be eligible alone.  

Filing for Divorce First

Chapter 7 proceedings can be resolved in a matter of months; however, chapter 13 requires petitioners to establish a three- to five-year payment plan. Therefore, if you want to declare chapter 13, it’s best to finalize the divorce first so that the payment plan will not be affected. It’s also wise to file for divorce first if you want to declare chapter 7 but will only meet the income requirements by filing alone. If this is your plan and you take a strategic approach to dividing assets in the divorce, it may be possible to keep sentimental property in the family so at least your children can still inherit it. It’s essential to talk to a bankruptcy lawyer before attempting to do so, though, to avoid being accused of fraud. 

If you want to discuss your particular financial situation with a bankruptcy lawyer, turn to Brian Kawamoto Attorney on Oahu, HI. With more than 25 years of experience practicing law, this strategic lawyer helps clients file for bankruptcy and navigate complicated financial disputes. In addition to bankruptcy law, he is well versed in estate planning, IRS tax audits, and foreclosure proceedings. To reach out and request a consultation with this bankruptcy lawyer, visit his website or call (808) 486-6107.