It’s not uncommon for people who’ve decided to end their marriage to find themselves in dire financial straits or to anticipate financial ruin following the divorce. If you’re planning on pursuing both divorce and chapter 7 or chapter 13 bankruptcy, you are not alone. Since you can’t file for both simultaneously, though, it’s important to consider the following circumstances from all angles before proceeding. 

When to Declare Bankruptcy First

If you intend to pursue chapter 7, it may be wise to do so before filing for divorce. Liquidating nonexempt assets and discharging applicable debts in advance will streamline the divorce proceedings when it comes time to divide assets. And depending on your financial situation, it may be possible to take double exemptions on certain assets if you and your spouse declare joint bankruptcy. 

If you want to finalize the divorce as quickly as possible, though, it’s important to remember that you won't be able to do so as long as the bankruptcy is pending. As soon as you file the petition, the bankruptcy court will enact an automatic stay, which essentially freezes your assets and debts until everything is resolved. Naturally, this will prevent the family law judge from dividing your property during the divorce proceedings. Depending on the circumstances, it might take anywhere from four months to a year to complete a chapter 7 bankruptcy. 

When to File for Divorce First 

If your household income is too high to qualify for chapter 7 while still married, you may want to wait until after you file for divorce to submit the petition. Generally speaking, it’s also wise to finalize a divorce before declaring chapter 13 bankruptcy.

Chapter 13 requires petitioners to devise a three-year to a five-year repayment plan. If you implement this plan prior to divorcing and it includes joint debts, you’ll have to modify its terms once the settlement has been finalized. And while your household income may be considerably lower following the divorce, there’s no guarantee that your chapter 13 bankruptcy obligations will be. 

How to Get Started 

If you’re planning on filing for both divorce and bankruptcy, turn to a reputable attorney to determine how you should proceed. A seasoned lawyer will evaluate your financial situation and let you know whether you qualify for chapter 7 or chapter 13 and, based on the circumstances, whether you should pursue divorce or bankruptcy first. 

If you need debt relief, turn to William C. Rieth to explore your options. Practicing out of Rochester, NY, this compassionate bankruptcy attorney has been helping clients regain their financial footing for more than 25 years. His family-owned and operated firm helps clients with chapter 7, chapter 11, and chapter 13 bankruptcy. To schedule a consultation, call (585) 232-6520.