When bankruptcy and divorce collide

On Behalf of | Nov 7, 2023 | Bankruptcy

It’s no secret that unsustainable debt can cause a marriage to crash and burn. The stress and tension of mounting bills and frequent, intrusive calls from creditors can prove to be the straw that breaks the marital camel’s back.

Bankruptcy and divorce are two unpleasant subjects that all couples hope to avoid, but sometimes that just isn’t possible. If you find yourself in this unfortunate position, it is prudent to strategize before filing for either. The following information might be helpful.

Should you file jointly?

Some filers gain an advantage by filing jointly as a couple before beginning the divorce process. The will only be on the hook for one set of filing and legal fees versus two separate sets. But there can also be advantages to delaying the bankruptcy filing process for other Texas couples.

For instance, if you are married to a high earner but earn much less yourself, you could potentially file separately post-divorce under Chapter 7. But by filing jointly as a couple, your combined income would mean that only a Chapter 13 bankruptcy would be an option.

You cannot discharge alimony or child support

Some filers think that waiting to file after they have divorced will wipe out any spousal or child support. That is a fallacy, as those types of debts are non-dischargeable in either type of bankruptcy.

Bankruptcy is a complex legal process governed by an oft-changing set of rules. Everyone’s financial status is unique, and nothing should be assumed to avoid any unpleasant surprises down the road. Learning the pros and cons of filing for bankruptcy before or after your divorce can help you achieve the best possible outcome.