Bankruptcy and Divorce

Published on July 10, 2020 by J. Andrew Meyer

Bankruptcy and Divorce

Couples who are considering divorce and who have accumulated considerable debt during the marriage may want to consider bankruptcy before or after filing for divorce. Most people know that divorce involves the division of marital property, also known as property obtained during the marriage. But few couples are aware that debt accrued during the marriage is also split up amongst the parties upon divorce. Ideally, couples would prefer to have all debts paid off prior to filing for divorce. Unfortunately, life often does not work out that way, and many couples are faced with the unenviable decision of how to handle marital debt. Of course, divorce laws are state specific, so it is always best to consult with an experienced attorney before deciding to file for bankruptcy or divorce.

When Does It Make Sense To File For Bankruptcy Before Divorce?

If you and your spouse are headed for divorce, and are on good terms, Chapter 7 bankruptcy may be a quick and easy way to eliminate unwanted marital debt prior to filing for the divorce. Filing for bankruptcy jointly prior to divorce may also save money in attorney’s fees and court costs. Suppose one spouse earns all or the majority of the income. By filing jointly prior to divorce, expenses for both parties will be considered in the court’s calculation as to whether the income earning spouse is eligible for Chapter 7. Finally, you might be able to protect more property by filing together instead of filing individually. You can also protect property in bankruptcy by using exemptions. In fact, many states will allow a married couple filing jointly to double most of the exemptions which can result in more property being protected overall.

Filing For Bankruptcy After Divorce

If your separation and potential divorce are not amicable, it may not be feasible to jointly file for bankruptcy prior to divorce. Additionally, if both you and your spouse work and bring home substantial income each month, you may not qualify for Chapter 7 bankruptcy as there are income limitations on eligibility for Chapter 7.

Further, filing for bankruptcy after a divorce will mean that both spouses will need to hire their own separate attorneys and pay separate court and administrative fees. Still, Chapter 13 may be an option, but it is important to remember that Chapter 13 could take years, necessitating monthly payments that both spouses will have to make separately. However, by filing Chapter 13, there is less risk of losing assets.

One final note on bankruptcy after divorce regarding the discharge of jointly held debt: If your divorce decree orders one party to pay jointly held debt, and that party gets that debt discharged through bankruptcy, the creditor may still pursue the other party for collection of that debt.

Which Is Right For Me?

Both divorce and bankruptcy can be complex legal processes that can have long lasting effects on each other. If you are considering bankruptcy, divorce, or both, it is vital that you speak to any attorney who is familiar with both areas before deciding which path is best for you.

Florida Bankruptcy Attorneys

The attorneys and staff of The Bankruptcy Team have decades of combined experience helping clients with mortgage modifications, foreclosure defense and bankruptcy alternatives to effectively resolve their financial problems. If you are dealing with an unmanageable debt situation and are contemplating bankruptcy, reach out to The Bankruptcy Team to consult with one of our bankruptcy attorneys today.

J. Andrew Meyer

Andrew Meyer was born in Deland, Florida, in 1970. He graduated with an International Baccalaureate Degree from St. Petersburg High School in 1988, and attended the University of Florida, graduating in 1991 with a degree in Economics awarded with High Honors. Mr. Meyer also attended law school at the University of Florida, receiving his juris doctorate degree in 1995. While at the University of Florida, Mr. Meyer was inducted into Florida Blue Key and Phi Beta Kappa. Mr. Meyer was first trained as a lawyer by Richard T. Earle, Jr., and thereafter worked at the Attorney General's Office for the State of Florida in the Bureau of Criminal Appeals before becoming a senior staff attorney for the Florida Second District Court of Appeal. Mr. Meyer also served as a law clerk to the Honorable Chris W. Altenbernd, Retired, at the Second District Court of Appeal. Following his time at the Second DCA, Mr. Meyer worked at Carlton Fields, focusing his practice on appellate matters. In 2004, Mr. Meyer became an advocate for consumers as a partner at James Hoyer, and then later moved to Morgan & Morgan's class action department in 2009.

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Bankruptcy and Divorce