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Important connections between divorce and bankruptcy

Bankruptcy and divorce: Two topics that no one truly or expects to wants to experience. Unfortunately, many people will. These two topics are also linked in many ways. A couple may have money problems and these financial issues fester until a divorce occurs. Alternatively, a divorce may cause financial stress on one or both spouses, leading to a bankruptcy filing. It is critical you and your attorney understand the connections between these two critical pieces of legal action.

Depending on your situation, you may be inclined to get a bankruptcy before you file for divorce, or wait until after your divorce to file for bankruptcy.

Deciding whether or not to file for bankruptcy before or after the filing of the divorce is an important decision. Filing for divorce first can, at time, be beneficial. Since Chapter 7 has income restrictions that require the filer to be below a certain income threshold, filing for divorce first will remove your joint incomes as being considered towards the threshold rule. While a dissolution prior to a bankruptcy filing can halt the dissolution process.

Bankruptcy and divorce are complex topics on their own. When you are contemplating a bankruptcy filing and a divorce you should consult with an attorney as soon as possible to address your concerns.

Source: FindLaw, "Bankruptcy and Divorce: Which Should You File First?," Le Trinh, July 23, 2015

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Goddard & Malmquist
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