My spouse and I accumulated $35,000 in marital debt during our 2.5 years together. I am having a great deal of trouble keeping up with payments on credit cards, repossession, and legal fees. The cards and other credit accounts were opened in my name since i was the only one able to qualify, but were opened during the marriage. I also have a large amount of tax debt due to my wife claiming the child as an exemption and not filing jointly for 2016 on purpose! Should i wait until the divorce is finalized or move forward in advance to file bankruptcy?
I typically advise getting the divorce finalized first. While most divorce related obligations are non dischargeable, some property settlement obligations can be modified in a Chapter 13 or 11. Also, you want to discuss the possible indemnification obligations that might be imposed on you such that even if you subsequently file, you may still indirectly be paying on debts. Your bankruptcy lawyer should interface with your marital lawyer to see how the prospect of your future filing might give you settlement leverage
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The timing of filing a bankruptcy when a divorce is pending is a judgment call after review of the facts and circumstances of each case. Budget issues come into play-will there be any alimony or child support possibly awarded to or from you? Are their joint assets and no joint debts-or joint debts? Tenancy by the entireties issues could be involved. Budget for means test purposes could be involved. Would a joint bankruptcy or each of you filing a chapter 7 now, if you can cooperate without a conflict, advisable? You need a thorough consultation first.
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I don't have a "default" answer to this question. When making this decision, there are several issues to consider. What is the amount , if any, of joint debts? If there are no joint debts, then will the exemptions be maximized if bankruptcy is filed before the divorce is finalized? If there are joint debts, will the spouse be willing to file bankruptcy jointly, or somewhat contemporaneously? You really need professional guidance to make this decision.
Posting questions anonymously and receiving general answers do not substitute for consulting with an attorney licensed to practice in the jurisdiction in which you live. Answers posted here by Kevin C Gleason are only intended for general education of the public on legal matters. Please consult a qualified professional before deciding what to do about your situation.
Yes, the usual answer is divorce first. Just don't agree to take on any of the debt ion the divorce, b/c then the BK sometimes won't be as helpful.
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