Financial hardship often follows divorce. Expenses that were once shared by two are now carried by one.
For many people, this transition can lead to mounting debt and missed payments. Understanding your options can better equip you to move toward a better financial future.
Should you file before or after the divorce?
The financial impact of a divorce can be significant. It’s often a struggle to maintain a household on a single income, compounded by legal fees and the loss of shared benefits like health insurance.
At some point, bankruptcy may seem like a practical way to regain stability. Once you decide to move forward, it’s a question of whether you file for bankruptcy before or after your divorce is finalized.
Filing before the divorce is finalized can sometimes simplify matters by reducing the amount of debt that needs to be divided and potentially lowering legal costs. On the other hand, it may make more sense to wait to better understand your financial situation, any new obligations that may arise and whether specific debts will be assigned to you in the divorce decree.
A common misconception is that you are not responsible for any debts assigned to your former spouse. However, creditors aren’t bound by divorce agreements. If your name remains on a joint account, they may still hold you responsible for the debt.
Bankruptcy may help address these obligations, but it doesn’t automatically remove your liability. Therefore, it’s essential to address shared debts as soon as possible.
Another obligation not eliminated by bankruptcy is support. Alimony and child support must continue to be paid during and after a bankruptcy case, and you will still owe any past-due amounts.
Going through both divorce and bankruptcy can feel overwhelming. Taking the time to speak with a legal professional can help you avoid costly mistakes and better protect your financial future.
