Filing for divorce is a difficult decision, and it may be made more complicated by a couple’s financial difficulties. If a separation is imminent, the thought of debt and bankruptcy may be overwhelming. This is why many clients ask whether they should file for divorce or bankruptcy first. The answer isn’t as simple as it seems, and in many instances, a Bankruptcy Lawyer In Puyallup Wa may be able to provide help and advice.
Both Parties’ Income
If both spouses stay in the marital home and have substantial income, it may be hard to jointly qualify for Chapter 7 before a separation or a divorce. A lawyer can discuss whether it’s sensible to separate before filing and how the couple’s joint income will affect the case. However, if the parties are living separately or are already divorced, their income is considered individually.
The Parties Have to Agree
A joint bankruptcy may be impossible if both parties don’t agree. Spouses are not required to file, and it’s difficult to force the issue. The person wanting the bankruptcy may be able to get it individually, even over the other party’s objections. Here, filing before the divorce may allow both parties to get a fresh start.
Spouses’ Separate Property
In some instances, one party has separate assets through gifts, an inheritance, or something they obtained before the marriage. In these situations, the other person may want to file without involving the spouse’s assets. To determine whether the filing should take place before or after a divorce, it’s crucial to consider how the debts are allocated.
The Automatic Stay
If divorce proceedings have already started, an automatic stay may delay the final decree. During bankruptcies, all property becomes part of the bankruptcy estate unless it falls under an exemption. This means that the assets cannot be divided until the case concludes or the bankruptcy judge gives permission. While a bankruptcy won’t affect custody, child support, or alimony, it will undoubtedly affect the division of marital property.
As shown here, there are many factors to consider when filing for divorce and bankruptcy. These cases are quite complex, and most couples can’t handle them alone. Call a Bankruptcy Lawyer In Puyallup Wa today to request a free consultation.