Filing bankruptcy after divorce is a common need as individuals face the financial strain of separating households and dividing debts. If you’re considering bankruptcy after a divorce, understanding the timing and legal implications is essential. While there is no set waiting period after divorce to file for bankruptcy, there are strategic and legal factors to consider, including the type of bankruptcy, the division of debts, and the potential impact on your credit and financial recovery.
When Should I File Before Divorce?
Filing for bankruptcy before divorce may offer certain advantages, depending on your circumstances:
- Joint Filing: If you and your spouse file for bankruptcy together before divorce, you can eliminate marital debts, simplifying the property division process.
- Lower Costs: A joint bankruptcy filing before divorce can save on legal fees, as you’ll share these expenses.
- Streamlined Process: Resolving debts in bankruptcy before the divorce can reduce conflict and streamline divorce proceedings.
However, if you and your ex-spouse cannot cooperate or if your financial situation worsens after divorce, filing for bankruptcy individually afterward may be the better option.
Factors to Consider When Filing for Bankruptcy After Divorce
In most cases, you can file for bankruptcy immediately after finalizing your divorce. However, there are certain factors you should consider, as they can have an impact on the outcome of your bankruptcy case.
1. Division of Marital Debts
During a divorce, the court divides marital debts between spouses. If you assume responsibility for certain debts in the divorce settlement and later file for bankruptcy, those debts may be discharged in bankruptcy. However, filing after divorce could leave your ex-spouse responsible for debts you were initially assigned, potentially leading to legal disputes. This means that your ex could go after you by filing a contempt citation against you in your divorce case. They also have the option of suing you in civil court.
2. Type of Bankruptcy
There are two main types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 Bankruptcy discharges most unsecured debts, such as credit cards and medical bills. Most times, this process only takes 3-6 months. Chapter 7 has income eligibility requirements, which may be easier to meet after a divorce if your household income decreases.
Chapter 13 involves a repayment plan lasting 3-5 years and is often used for debts that cannot be discharged in Chapter 7, such as certain tax obligations or mortgage arrears. If you anticipate keeping joint debts or assets from the marriage, this can give a structured way to manage them. To file for Chapter 13, you must demonstrate a stable income sufficient to meet the repayment plan requirements.
3. Impact on Joint Debts
If you and your ex-spouse have joint debts, bankruptcy can complicate matters. For example, filing bankruptcy discharges your responsibility for joint debts, but creditors may still pursue your ex-spouse for payment. Timing your bankruptcy carefully can help minimize conflicts over joint debts.
4. Legal Protections During Bankruptcy
When you file for bankruptcy, an automatic stay goes into effect, temporarily halting collection actions, wage garnishments, and lawsuits. If you are struggling to manage post-divorce financial obligations, filing for bankruptcy can provide immediate relief.
Tulsa County Family Attorneys
There is no mandatory waiting period to file for bankruptcy after divorce, but timing your filing strategically can help you maximize the benefits and minimize complications. Whether you file before or after divorce depends on your financial situation, the nature of your debts, and your ability to cooperate with your ex-spouse. If you’re considering filing for bankruptcy after divorce, contact us today at Tulsa Divorce Attorneys & Associates by calling 539-302-0303 or contact us online.