The stress of filing for divorce is enough without adding bankruptcy on top of it, but sometimes both need to occur in a short time frame. Working with a bankruptcy attorney in Arkansas could help divorcing couples decide which one to file first. The filing order carries legal implications that require careful consideration. Before deciding which method is right for your family, it's helpful to understand the difference between the 2 types of bankruptcies you can file: Chapter 7 or Chapter 13.

How Does Chapter 7 Bankruptcy Affect Divorce?

Chapter 7 bankruptcy is designed to forgive all unsecured debts. This option tends to discharge within 90 days and could be finalized quickly before the divorce. It's also limited to income levels below the median for families in Arkansas.

If you plan to file for Chapter 7, consider the implications of filing collectively or separately from your spouse. Filing together means your household income is combined, which could make you ineligible for this plan. Speaking with a bankruptcy attorney can help you decide which solution is right for you.

How Does Chapter 13 Bankruptcy Affect Divorce?

By contrast, a Chapter 13 bankruptcy could last between 3 and 5 years, as it will require you to repay some or all debts through a repayment program. If you are considering filing under this plan, it might be better to file individually after the divorce since it takes more time to complete.

How Can Bankruptcy & Divorce Affect One Another?

In many cases, bankruptcy takes priority over an impending divorce. Filing bankruptcy during divorce could postpone the distribution of finances. Consequently, there's no real way to file them simultaneously.

What Are the Benefits of Filing for Bankruptcy First?

If you and your spouse are on friendly terms, then consider speaking with a bankruptcy attorney before a divorce. A joint filing will allow for all debts to be addressed under a unified case. People may think of this method as a "clean break."

What Are the Benefits of Filing for Divorce First?

Filing for divorce first could be more sensible if your income levels do not qualify for Chapter 7. For example, you might qualify for Chapter 7 separately after divorce due to changes in your disposable income. Plus, Chapter 13 bankruptcies place holds on assets and take years to complete.

Speaking with a bankruptcy attorney can help you and your spouse decide which option is right for you. The dedicated attorneys at Bueker Law Firm can help you navigate through complex divorce and bankruptcy matters. They serve Arkansas County, AR, and surrounding areas. You can contact them today for a free bankruptcy consultation by calling (870) 673-1313 or visiting their website.