Going through divorce and bankruptcy in Atlanta at the same time can be very stressful. If you are currently in a situation such as this, read below to learn whether you should file for bankruptcy before or after your divorce has been finalized.

The Relationship Between Bankruptcy and Divorce

Generally, bankruptcy is known to take priority over your divorce claim. If you are looking to file for bankruptcy while going through a divorce, keep in mind that there may be a delay in the distribution of assets until the bankruptcy process is completed. In layman’s terms, it is best to complete the bankruptcy process prior to the completion of a divorce. Unfortunately there is no way to do both tasks at the same time.

One should also keep in mind that bankruptcy handles debts tied to an individual’s name of social security number which can affect how debts are treated during the divorce procedure. Bankruptcy courts treat your income differently depending on whether you are married, separated, or divorced when the case is filed.

Should I File for Bankruptcy First?

If you are fortunate enough to be in good standing with your spouse when considering divorce and bankruptcy, consider applying for bankruptcy first. Filing jointly will allow all debts to be addressed under one bankruptcy case. Doing this will not only eliminate your collective debt, it may also increase your exemption amounts. This can also be helpful if your spouse is the breadwinner because it can widen the chances of you qualifying for Chapter 7.

Bankruptcy is also accommodating in the elimination of contracts, such as car loans or home mortgages, that are costly and a burden to you and your spouse.

The Chapter 7 bankruptcy process takes about 90 days to complete.  During this period, you and your spouse can remove unsecured debt which could assist in putting an end to any financial disagreements you may have.

It is important for you to remember that if you and your spouse file for Chapter 13 bankruptcy together, then both of you are responsible for the repayment of the debt. There may be an issue which could prevent you from dividing your assets to sale.

After the Atlanta bankruptcy is completed, then divorce will proceed without any further delay from bankruptcy.

Should I File for Divorce First?

You should consider filing for divorce first if your shared income is too high to qualify for Chapter 7 bankruptcy in Atlanta. For instance, if you make notably less money than your spouse, you may be qualified to use Chapter 7 to eliminate the debt filed under your name without a Chapter 13 payment plan. Depending on the situation, both spouses may be eligible for Chapter 7 bankruptcy separately after filing for divorce even if they could not originally do it together.

Proper planning before filing for divorce may also move assets outside the influence of a trustee.  In particular, if one spouse is awarded a home during a divorce proceeding, a proper judgment with the appropriate transfer of title can protect the ex-spouse from creditors.

Lastly, divorcing first will aid in support considerations that will help the filer to know that amount before the bankruptcy procedure. The support can also affect the outcome of your bankruptcy proceeding. Ultimately, having a bankruptcy repayment plan based on income that you do not have access to is not an ideal option.