It’s not uncommon for those on the verge of divorce to find themselves in dire financial straits; they may be considering bankruptcy as well. If this is the situation you’re in, the best way to proceed will depend on your circumstances. There are some scenarios in which it makes sense to discharge debt first and others in which you should end your marriage first. 

When to Declare Bankruptcy First 

If you want to declare chapter 7, filing for bankruptcy first could streamline the divorce proceedings considerably. The chapter 7 process liquidates nonexempt assets and then discharges debt immediately by using these funds to pay back creditors, thereby simplifying your financial situation. If you and your spouse file together, you may be able to take double exemptions. You can also save on attorney fees. 

When to File for Divorce First 

Typically, it’s wise to file for divorce before declaring chapter 13. Also known as reorganization bankruptcy, chapter 13 requires petitioners to implement a 3- to 5-year repayment plan. If you set this plan in place and then file for divorce, you’ll have to restructure it when dividing other assets and liabilities. This can complicate the proceedings. 

You should also consider filing for divorce first if you plan on pursuing chapter 7, but your joint income is too high to qualify for it together. As long as you’ll pass the means test on your own, waiting to file chapter 7 could be strategic, especially if you’re anticipating a sizable settlement. Should this happen, you may not even have to declare bankruptcy after the divorce, and you can save your credit score from the hit. 

If you want to pursue a divorce, bankruptcy, or both, turn to The Law Office of Christopher J. Swatosh. Led by a seasoned attorney who has more than two decades of experience, this firm offers a broad range of legal services. Representing clients throughout Ava, MO, and the surrounding areas, they assist with family law disputes, debt relief, criminal defense, personal injury suits, and wrongful death claims. To request your initial consultation, call (417) 683-2987.