How Divorce Affects Your Bankruptcy

16 June 2015
 Categories: , Blog


Given the financial strain that bankruptcy can place on someone, it is not uncommon for those going through divorce to be forced to file for bankruptcy. Bankruptcy can complicate situations such as any support payments you must make. Also, your coming divorce will affect whether you should file for bankruptcy sooner or later.

How Bankruptcy Affects Child Support

When filing for divorce, any support or alimony that you are required to pay is not dischargeable. Unlike with many debtors, anyone who you owe child support to will not have to file any proofs or claims. Also, any automatic stay on collection activities does not apply to your ex spouse.

However, if your ex spouse is filing for a motion to increase child support payments, there are many judges who will not rule on the child support increase case until the bankruptcy case is over. Therefore, you will be able to avoid paying a greater amount in child support at least until the bankruptcy case is over.

When You Should File for Bankruptcy

If you have not yet filed for bankruptcy, you will need to determine whether it is wiser to file for bankruptcy first or file for divorce first. If you and on good terms with your partner, you might decide to file for bankruptcy first because you can file jointly. All of your debts will be handed at once with a single bankruptcy case. Also, if you or your partner earns the majority of the household income, the partner who earns more will be more likely to qualify for Chapter 7 bankruptcy since all of the debt will be lumped together.

Many of the contracts that you no longer want, such as a car loan or a mortgage, will be eliminated under bankruptcy. This is helpful if you would like to eliminate these contracts so they do not tie you to your ex spouse.

When You Should Divorce First

Even if you are on good terms, it can sometimes be beneficial to file for divorce first because your combined incomes might lead to both of you not being eligible for Chapter 7 bankruptcy. If you and your ex are not on good terms, you may find yourselves in a battle over support payments. It will be helpful to know what these support payments will be before filing so you will know whether you will have an income to make any necessary payments. While chapter 13 might have been workable before you filed for divorce, with new support payments, you may not have access to money needed to pay for the chapter 13 bankruptcy and chapter 7 might be necessary instead. Talk to an attorney (such as Richard S. Ross - Bankruptcy Attorney).