Can You Divorce While A Bankruptcy Is Pending?
Posted on: 16 July 2020
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If you and your spouse are currently involved in a Chapter 13 bankruptcy proceeding and are considering ending your marriage, there are some things you'll need to consider before you file for divorce. In some cases, the bankruptcy case will simply need to conclude before your divorce is finalized; in other situations, you may be forced to shift to a Chapter 7 bankruptcy instead. Learn more about the laws and rules behind divorcing during a bankruptcy case.
Which Comes First?
Generally, it's best to file for bankruptcy before filing for divorce. This allows a stay to be put into place that will essentially pause your financial obligations, allowing the divorce case to proceed more freely. There are some exceptions, depending on the value of the property you're planning to split, so it's important to consult a bankruptcy attorney before you take any other first steps.
What Happens After You File for Divorce?
If you file for divorce while a bankruptcy case is pending, you'll need to decide whether to dismiss the bankruptcy case and split debts with your spouse, continue with a Chapter 13 bankruptcy by restructuring it, or convert it to a Chapter 7. A Chapter 13 bankruptcy can last three to five years, which can delay the divorce process unless you're close to closing the bankruptcy case before you file for divorce. On the other hand, a Chapter 7 bankruptcy can often be wrapped up in as little as six months.
If you choose to stay in your Chapter 13 plan rather than dismiss it, you'll need to restructure it so that it essentially is divided into two cases. You and your soon-to-be-ex spouse will each be responsible for a share of your debt repayment, and your successful completion of the bankruptcy won't necessarily be impacted by your spouse's progress.
Do You Need a New Attorney?
Naturally, if you and your spouse are using just one attorney to handle your bankruptcy case, you may need to hire a new attorney to allow you to complete the restructured bankruptcy. You'll also need an attorney to assist you with your divorce, since divorcing during bankruptcy can raise complicated issues that can easily go awry. In some cases, it can make sense to hire a law firm that offers both divorce and bankruptcy services, as this allows your attorneys to easily communicate with each other about your case and any issues that arise.
Contact a law firm that offers bankruptcy attorney services to learn more.