The divorce rate in America is hovering around 50 percent, so if you’re married, you’ve got a 50/50 chance that it will end in divorce. Unfortunately, the divorce is usually just the beginning of a divorced individual’s troubles. After divorce a whole slew of money troubles can develop that put you deep into a financial hole, especially if you are already struggling before you get a divorce. That’s why debtors who are considering a divorce should also explore their bankruptcy options.
Reasons you should consider bankruptcy BEFORE you get a divorce:
- Your expenses will go up while your household income will go down. The reality is that divorce is financially devastating for all involved and can make it even more difficult to pay bills with a reduced household income. Filing bankruptcy before you file for divorce may be helpful if it can discharge most or all of your unsecured debts leaving you and your ex-spouse on better financial footing after the divorce.
- Debts that you are ordered to pay are not dischargeable in bankruptcy. Many debtors mistakenly believe that once they file divorce and are ordered to pay certain debts that they can just go and file bankruptcy and successfully discharge those debts. The reality is that while they can file bankruptcy, they cannot discharge debts they are ordered to pay in a divorce decree. On the other hand, if the debtor/spouse files bankruptcy and then files for divorce the divorce court can’t force the debtor to pay debts discharged in bankruptcy.
- If your spouse decides to file for bankruptcy, you could be stuck footing the bill for debts that you held with them. For example, if you were both on a credit card and your ex-spouse files bankruptcy and that credit card debt is discharged, the creditor will come after you. This is why you need to speak with a bankruptcy attorney about your specific situation before you file for divorce to find out if filing bankruptcy would be to your benefit.