Bankruptcy and divorce can be an emotionally difficult time, especially if both events are happening at once. The two interact with each other, affecting the potential outcome. However, there are strategies used by your divorce attorney to reduce stress and make the process move faster. 

A Guide to Bankruptcy & Divorce

When Should Bankruptcy Be Filed?  

You shouldn’t file for divorce and bankruptcy at the same time. If the divorce is an amicable one, filing for Chapter 7 bankruptcy first would be advantageous.

Chapter 7 is beneficial for quick divorces, as it eliminates debts within three to six months, allowing both spouses to move on faster. By filing together, you can share an attorney, decreasing costs. 

Chapter 13, however, takes three to five years. Rather than having most them forgiven, you’ll have to pay some or all of them back. 

Most married couples also accrue joint debt. Filing together will protect both of you from paying joint debt. When filing separately, the debt will be divided between the two of you.

However, if one spouse doesn’t pay their share of the debt, the creditors will charge the other spouse even if they paid their half already. While your divorce attorney will help file motions and have the non-paying spouse held in contempt, the court proceeding can take up to a year. 

Missouri has numerous exemptions that joint filers can take advantage of, allowing them to retain money and property during the bankruptcy process. This includes the head of household, double wild card, and child exemptions. 

However, if your income levels are too high, you may not qualify for a Chapter 7 filing. Filing for divorce first would separate your incomes and allow you to file for Chapter 7. 

Are All Debts Included in the Bankruptcy?  

Not all debts are eliminated, even when filing for Chapter 7 bankruptcy. Whether you file jointly or not, alimony and child support payments must still be made. However, Missouri’s exemptions will limit the amount of maintenance required to a $750 maximum. 

Student loans and fines owed to the government are debts that will still need to be collected, despite any bankruptcy filings. You’ll also be responsible for any penalties or court fines. 

In some cases, the court may decide not to approve of your bankruptcy filing. Instances include violating court orders, failing to provide tax documents, hiding property, and destroying records. When consulting with your divorce attorney, be upfront with all of your finances, so the process can move along smoothly. 

If you need help during your divorce, reach out to Rathjen-Decker Law, LLC. They have nearly 20 years of experience in helping spouses navigate the process. Their divorce attorneys provide compassionate care and comprehensive services. For more information on their practice areas, including child custody law, visit their website. If you’re in the St. Louis, MO, area, schedule a consultation with them at (314) 727-6933.