Anyone facing separation or divorce is likely to feel overwhelmed by the emotional loss and financial insecurity. A bankruptcy attorney will have the legal and financial understanding necessary to help you resolve the complexities of your case. If you’re questioning whether you should file for bankruptcy first or divorce, below offers more information on the matter.

Filing for Bankruptcy First

If a divorcing couple files a joint petition for protection under the bankruptcy code, it can simplify divorce proceedings. By filing jointly, the qualifying debts of both spouses will be eliminated. You’ll also have less property to divide and less debt that a divorce decree will assign one of you to repay.

A bankruptcy attorney can help you sort out your options and pursue the smartest course. It may, for example, be easier to qualify for Chapter 7 protection after a court dissolves your marriage because your income will be less.

Filing for Divorce First

Chapter 7

Under Chapter 7, individuals are freed from the obligation to pay back unsecured debts through liquidation, including credit card balances and medical bills—but not what’s owed for child support, student loans, or taxes. After excluding some assets for living expenses, a court trustee sells your property to pay off your debts in full or in part.

Although a “means test” excludes high-earning households from filing for debt relief under Chapter 7, other Chapter 7 cases can usually be settled in a few months before divorce if you qualify. If your income is above the median income level for North Carolina, you may not be eligible.

Chapter 13

When you file for Chapter 13 protection, instead of liquidating property to settle debts, you agree to repay creditors a portion of what you owe for several years. This allows you to catch up with financial obligations over time.

Because paying back creditors under Chapter 13 may take up to five years, it may not always be reasonable for a couple to pursue a Chapter 13 filing before a divorce. Instead, ex-spouses should consult a bankruptcy attorney about filing for debt relief after a court grants their divorce decree.

C. Roland Krueger Attorney and Counselor at Law in Lexington, NC, will help you gain clarity about the bankruptcy process as it relates to divorce. He’s represented clients in Chapter 7 and Chapter 13 filings for nearly 40 years. He’ll review your circumstances, explain your options, and help you get back on track. Visit his website for more information about how to get started with a bankruptcy filing, or call (336) 248-8464 to schedule a free consultation.