Divorce and bankruptcy often go hand-in-hand. According to marriage and family therapists, money is the number one stress factor in many relationships. Each spouse is likely to believe that the other is mostly responsible for the couple’s financial situation. Money problems can cause a marriage to fall apart, and bankruptcy will also impact a divorce as well. If you are in the process of divorce and you or your spouse files for bankruptcy, the divorce proceedings will come to a screeching halt until the bankruptcy court grants approval. Ideally, you and your spouse should cooperate and file jointly before divorce. However, a divorce that occurs during an ongoing bankruptcy can be accomplished.
In most cases, both spouses are responsible for the debts incurred during the marriage, but a divorce settlement will divide up the debts, assigning responsibility for some debts to one spouse and some to the other. But that divorce settlement is between you and your ex-spouse; it doesn’t bind the creditor, who can collect the debt from either one of you, which means if your ex-spouse doesn’t pay his or her share of the debts, the creditor can come after you for payment. If your ex-spouse files for bankruptcy after the divorce, the creditors will look to you to repay those debts. If you were barely making ends meet before that happens, your spouse’s bankruptcy could send you into bankruptcy as well.
If your spouse files for bankruptcy after a divorce has been filed but before it has concluded, the divorce court will have to wait until the bankruptcy court approval is finished to divide marital property, but the court can still award custody, visitation, child support, alimony and even grant your divorce. If bankruptcy is filed after the final divorce judgment, the former spouse still has to pay child support and alimony if awarded. For those reasons, it may make more sense for you and your spouse to file for bankruptcy before getting divorced. At least that way you will know where you really stand when it is time to divide the property. You and your spouse need to be able to work together on a certain level to accomplish this. If your relationship has deteriorated to the point where you can’t communicate with each other, then it obviously makes things more difficult.
Each situation is different. Consult a competent bankruptcy attorney to find out what works best in your situation. Contact us today via email or at (214) 740-1160 for a free, no obligation consultation at any of our Dallas area offices.
