THE ADVANTAGES (& POSSIBLE DRAWBACKS) OF FILING FOR BANKRUPTCY PRIOR TO DIVORCE
Bankruptcy and divorce can be two sides of the same coin, with either contributing to the other for many married couples. When people facing serious debt also are ready to end their marriages, whether they choose to pursue bankruptcy or divorce first will be important – and can have some important impacts on the other case that follows. It can also have longer term impacts on their finances and their abilities to get on with life after bankruptcy and divorce.
To highlight some of the issues people need to be aware of when considering whether to pursue bankruptcy or divorce first, below are some of the main pros and cons of filing for bankruptcy prior to divorce.
When you need answers regarding your best moves, based on your situation and goals, however, don’t hesitate to contact a Denver bankruptcy attorney at Garcia & Gonzales, P.C.
Pros to Filing for Bankruptcy before Divorce
Immediate solutions to debt problems – Serious debt problems tend to worsen over time, increasing the chances that creditors will try to sue you, repossess your assets or even garnish your wages. By filing for bankruptcy before your divorce case, however, you can put an immediate stop to escalating debt and creditors’ actions against you. This can be crucial if or when people are starting get warning letters from creditors (as bankruptcy can stop these actions from proceeding, but it can’t reverse them once they’ve occurred).
Doubled bankruptcy exemptions for joint filers – If you stay married and file for bankruptcy jointly with your spouse, you may be able to retain more of your property through the case. This is because certain Colorado bankruptcy exemptions are doubled for joint petitioners. For instance, the motor vehicle exemption can be doubled for joint petitioners, and this could mean that couples are able to retain vehicles that would have been forfeited had they filed separately.
Simplified property division in the future divorce case – When you resolve your serious and complicated debt issues prior to divorce, the process of dividing property in divorce will usually be far easier. This can make for a faster, cheaper divorce, allowing people to get on with their lives sooner.
Possible Cons of Filing for Bankruptcy prior to Divorce
Not qualifying for Chapter 7 – One possible downside to filing for bankruptcy prior to divorce is that couples who file jointly may not be eligible to proceed with a Chapter 7 bankruptcy case. This is because their combined income will be used in the means test, which can cause people to “fail” the test (and, consequently, be in eligible for Chapter 7).
Having to continue dealing with your ex for a few years – When couples file for Chapter 13 bankruptcy, their case take a few years to resolve, as they will have to develop and then follow through with a repayment plan. For married people who are not getting along or who are just ready to be done with their significant other, this can present a big drawback to filing for bankruptcy before divorce.
Contact a Denver Bankruptcy Attorney at Garcia & Gonzales, P.C.
Are you looking for real relief from serious debt? If so, you can trust the experienced Denver bankruptcy attorney at Garcia & Gonzales, P.C. to provide you with experienced help, honest answers and the highest quality legal services.
To learn more about your best debt relief options, as well as how we can help you, contact us today by calling or by emailing us using the contact form at the bottom of this page.
When you contact us, you will communicate directly with one of our attorneys, not a paralegal or legal assistant. We welcome Spanish-speaking individuals to contact us also – hablamos Español.