Sometimes when a couple decides to divorce, they may be contemplating how to deal with a difficult financial situation simultaneously. After accumulating debt during a marriage, many people wonder if they would be better off declaring chapter 7 bankruptcy jointly before a divorce or file separately afterward. The answer is, it depends on the unique circumstances of your case.
For one thing, you and your spouse will have to qualify to declare chapter 7 bankruptcy. Looking at your combined income and each persons debt, an attorney can make a determination to see if you will be able to. It may be, that one party has significant debt and less income compared to their spouse. Before a divorce, they may not qualify for chapter 7 because of the higher earning spouse, however, after the divorce is final, the individual strapped with credit card or other debt may be able to discharge the debt in bankruptcy based on their income alone.
Another consideration is to take stock of what assets each party has before the divorce. It may be that your spouse has separate property he or she brought into the marriage or an inheritance that are not part of the marital estate. However, if you file jointly, substantial assets may prevent you and your spouse from qualifying for bankruptcy protection. If you do qualify despite having these assets based on other factors such as income and debt, remember that those assets will likely be liquidated to pay off creditors in a bankruptcy proceeding.
It is a good idea to gather all your financial information including income, debts and assets and pour over the pros and cons of each scenario with the help of a knowledgeable bankruptcy attorney. After reviewing the specific information, your bankruptcy attorney can provide you with information to determine your best plan of action with regard to filing a joint or individual chapter 7 bankruptcy when divorce is a factor. Contact the Law Offices of Charles E. Covey for more information today.