Bankruptcy affects individuals of all economic statuses, and the people involved in a bankruptcy case or struggling financially are also often facing many other challenges in their lives. Unfortunately, low income and high debt—according to statistics—are a leading cause of weakened relationships. At Behm Law Group, Ltd., we’ve found that some of our clients are facing the struggle of divorce alongside the imminent difficulty of filing for bankruptcy in Mankato, MN.
The problem with divorce law, when it comes to bankruptcy proceedings, is that both deal with finances between spouses. It’s virtually impossible to handle the process of divorce at the same time as the process of filing for bankruptcy. The real question isn’t how to combine the two together, rather, which legal process to tackle first.
Bankruptcy before Divorce
Most divorces are not the dramatic affairs portrayed on television. In the real world, spouses are often on good terms. If on good terms, we recommend that bankruptcy proceedings take precedence over divorce. Filing a joint petition as spouses means your debts are consolidated into one bankruptcy case. Combining your debts means you and your spouse could increase your chances of qualifying for Chapter 7 along with your exemptions. It also means you and your spouse can get rid of joint contracts you don’t want and eliminate your unsecured debts before divorce. Most couples file for chapter 7 bankruptcy relief prior to starting a divorce because a bankruptcy can simplify the divorce process as there is no need for provisions for the assignment of debts in a divorce decree.
Divorce Before Bankruptcy
If your joint income is high enough to prevent you and your spouse from qualifying for Chapter 7 bankruptcy relief and you’re on poor terms and don’t want to be forced into a chapter 13 bankruptcy and handle chapter 13 repayment plan after your divorce, you should consider completing divorce proceedings before filing for bankruptcy. Spouses can separately qualify for Chapter 7 bankruptcy relief after divorce because there are increased living expenses. After a divorce, each spouse must support his or her own household on his or her own income instead of combining two incomes to support one household while married. In addition, sometimes it is better to have marital assets divided as between spouses in a divorce proceeding prior to filing a bankruptcy proceeding. Also, if one spouse winds up owing child support to the other spouse after a divorce the child support obligation can help the spouse who has to pay it qualify for chapter 7 bankruptcy relief when, otherwise, he or she would not be able to qualify.
For more information about how divorce can affect bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.