One shoe does not fit all sizes
Short answer, it depends. Longer answer, it depends upon a consideration of factors that are often situation specific and, accordingly, a fuller discussion with a bankruptcy and divorce counsel is recommended.
There are pros of filing for bankruptcy before filing a divorce.
Pros may include
- Filing for bankruptcy first can make property division during the divorce process easier.
- Filing for bankruptcy first is often less expensive than each spouse filing bankruptcy separately since most attorneys charge the same amount for an individual as they do for a married couple.
- When a joint bankruptcy is filed, you increase certain exemption limits compared to when filing alone.
- Getting rid of debt in a bankruptcy avoids splitting the debt during the divorce.
- Because financial issues can be cause for considering a divorce, getting rid of the debt in a bankruptcy can possibly save the marriage.
Likewise, there are cons to filing for bankruptcy prior to filing a divorce.
Cons may include
- The couple needs to work together during the bankruptcy process which can be challenging knowing there is a divorce on the horizon.
- A Chapter 7 bankruptcy requires the passing of the Means Test. The Means Test determines whether allowing someone to discharge their debts would be an abuse of the bankruptcy system. With dual income, it may not be possible to pass the Means Test which could result with the filing of a Chapter 13 bankruptcy, which takes longer. Thus, getting divorced first may make it easier to pass the Chapter 7 Means Test.
- Within a bankruptcy, you may agree to pay certain obligations; i.e. reaffirm the debt on a vehicle or a mortgage only to be obligated on the entire debt in a divorce.
If you are deciding whether to file bankruptcy prior to filing for divorce, it is best to speak to both an experienced bankruptcy attorney and an experienced divorce attorney. Both can offer valuable understanding based upon their experience for you to make the best choice in your situation.