The financial hit of divorce sometimes drives a couple to consider bankruptcy, and it can be complicated depending on the individual circumstances of your divorce to determine whether you should file bankruptcy before or after your divorce. While there are benefits to both, generally speaking, filing before your divorce can put you on more stable ground once your divorce is in motion.
If you and your spouse are on good enough terms to work through a joint bankruptcy, you will be able to have most of your joint debts addressed under that bankruptcy. This includes debts like car loans that cost too much, mortgages on homes that are underwater, medical bills and even your unsecured credit card debts. If you wait until after divorce to file for bankruptcy, and only one spouse files, the non-filing spouse will still be on the hook for debts.
What Type of Bankruptcy Do I File For?
Filing for Chapter 7 takes a much shorter time to complete than filing for Chapter 13. In Chapter 7, your debts will usually be discharged after a few months, whereas Chapter 13 can take three to five years. Depending on which you plan to file for, it can affect your decision to file before or after divorce.
Of course, every divorce is different and there is no one-size-fits-all solution to filing for bankruptcy when you are planning a divorce. However, the benefits can be great and can allow you to move forward with your divorce with less debt to divide, which simplifies the property division process in divorce.
Our Denver divorce attorneys help clients throughout Colorado with matters such as property division, including debts.