Divorce is a common reason for filing for bankruptcy relief. In some cases, both spouses may need assistance from the bankruptcy court to overcome the financial stress caused by a divorce. In other cases, one spouse may need to file a bankruptcy case because of the divorce. In either case, it is wise to consult with experienced Michigan divorce attorneys before the divorce, if possible. For some people, filing bankruptcy before a divorce is the best way to settle debt problems.
Filing for Bankruptcy Before a Divorce
Disagreements about money are a common reason why couples argue. In some cases, financial trouble can be one of the factors why a marriage fails. If both spouses are in financial trouble, it could make sense to file for bankruptcy relief before the divorce. Married couples can file a joint bankruptcy case, which saves money. If the spouses file separate bankruptcy cases, they pay double for what they would pay for a joint bankruptcy case.
By filing a Chapter 7 bankruptcy case before a divorce, the spouses can quickly discharge debts they cannot afford to pay. Filing Chapter 7 could result in both spouses being in a better financial position to transition from a two-wage earner home to a single-wage earn home. The bankruptcy case may resolve some of the issues that could complicate a divorce proceeding.
Is Filing Bankruptcy Before Divorce Always Best?
The answer to that question depends on your unique situation. For instance, couples who qualify to file for bankruptcy relief under Chapter 7 may receive their discharge within four to six months of filing their bankruptcy petition. However, this applies to a no-asset Chapter 7 case with no issues that prolong the case.
If the couple does not qualify for Chapter 7, they may need to consider a Chapter 13 bankruptcy case. A Chapter 13 bankruptcy case is a reorganization plan. Most Chapter 13 bankruptcy plans are 60-month plans. Therefore, you and your ex-spouse would be in bankruptcy together for over five years. That situation is typically not desirable for most individuals who want a divorce.
Talk to an Experienced Bankruptcy Attorney As Soon As Possible
Before taking any steps toward bankruptcy, it is best to consult an experienced bankruptcy lawyer. A bankruptcy lawyer carefully analyzes your financial situation, including your assets, income, debts, and other financial matters to determine your bankruptcy options. If you are considering a divorce, that fact must also be weighed carefully in the decision whether or not bankruptcy is right for you.
Your bankruptcy attorney and divorce lawyer can work together to determine the best way for you to obtain your divorce while protecting your property and income. What you want to avoid is filing a bankruptcy action during your divorce or vice versa without first weighing all options. Proceeding without experienced legal counsel could make matters much worse, both in the divorce case and in the bankruptcy case.
Contact Our Michigan Divorce Attorneys for More Information
Taking on two separate legal matters simultaneously can be extremely overwhelming. Avoid making a costly mistake by discussing bankruptcy and divorce with experienced Michigan divorce attorneys before you decide how to exit your marriage and resolve your financial problems. Contact our Michigan divorce attorneys to schedule a consultation.