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Should I Wait Until My Divorce is Final to File for Bankruptcy?

Posted on in Bankruptcy Attorney
Should I Wait Until My Divorce is Final to File for Bankruptcy?

Bankruptcy is a complicated process. As with many other things in life, like parenting your children and putting money away for your retirement, getting divorced complicates the bankruptcy process. If you are not sure about the future of your marriage or if you know that you will file for divorce in the near future, you might opt to put your bankruptcy plan on hold until the divorce is finalized. But sometimes, this is not feasible. In other cases, it actually makes more sense for a couple to file for bankruptcy together before they begin the divorce process. Whether you should wait until your divorce is finalized or not to file for bankruptcy depends entirely on your individual circumstances.

Is Qualifying for Chapter 7 Bankruptcy a Goal?

If so, you might want to wait until after your divorce is finalized because after the divorce, your household income will likely be lower. If you earn less each month than the median monthly income for other Illinois households your size, you automatically qualify for Chapter 7 bankruptcy.

Filing for Bankruptcy Jointly Before Filing for Divorce Can Make the Bankruptcy and Divorce Processes Easier

The debts you and your spouse accrued during your marriage are known as marital debts. You are both responsible for these debts. By eliminating these debts through a joint bankruptcy before you file for divorce, you can avoid the issue of assigning debts during the property division process. If you and your spouse both plan to file for bankruptcy, doing so together can also reduce your overall costs because you will only have to pay one filing fee and one set of court and attorney fees.

Another reason to consider filing for bankruptcy before you file for divorce is the automatic stay. When you file for bankruptcy, an automatic stay halts all legal proceedings regarding assets and income. This can effectively halt the divorce process, causing it to drag on much longer than necessary, costing you money and keeping your family in limbo.

Consider the Time to Complete the Bankruptcy Process

A Chapter 7 bankruptcy can be completed within a few months. A Chapter 13 bankruptcy can take three to five years to complete. If you opt to file for bankruptcy individually, think about how these time frames will coincide with your divorce. If you are considering filing for Chapter 13 individually, it might be best to wait until your divorce is finalized. For Chapter 7, you are less tied to a block of time, but you might need to wait until your household income is low enough to qualify.

Work with an Experienced Libertyville Bankruptcy Lawyer

If you are considering filing for bankruptcy, speak with an experienced bankruptcy lawyer about all relevant factors that could impact your bankruptcy. This includes divorce as well as external issues like student debt and your plans for the future. To learn more about all aspects of the bankruptcy process and to determine whether it is in your best interest to file for bankruptcy, contact our team at Newland & Newland, LLP to set up your initial consultation in our office. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.

(image courtesy of Alia├ža)

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