A divorce can come with enough complications. One spouse filing for bankruptcy once divorce papers have already been filed is something that’s guaranteed to complicate matters even more. A Morton divorce lawyer can let you know what to expect when this happens and why you may want to convince your spouse to file for bankruptcy before or after your divorce.
How Can a Bankruptcy Delay Divorce Proceedings?
One of the big questions that needs to be answered during a divorce is how property is divided. This includes your assets and your debts. When your spouse files for bankruptcy, they throw a big wrench in the works. Essentially, this puts your divorce on pause, and it’s difficult to proceed until your spouse has addressed their debts through the bankruptcy process.
What If My Spouse and I Both Share a Debt?
It’s important to figure out which debts you and your spouse are both responsible for. If your spouse files for bankruptcy, they may wipe out their debt and leave you completely responsible for a joint debt.
Here’s an example. Your spouse bought a new car a few years ago and you co-signed the loan with them. By filing for bankruptcy, your spouse may get their debt discharged, but you have no protection against creditors. The entity that financed your spouse’s car can come after you for the money they are owed!
What Happens to My Separate Property if My Spouse Files for Bankruptcy?
If your property is truly separate property, then nothing should happen to it. If there was an asset you owned before you got married, that should be considered separate property. The same rule would apply to something that was given only to you, like an inheritance.
The bankruptcy should only affect these assets if you commingled them with marital assets or put your spouse’s name on them. For example, if you received money from a loved one who passed away and put it in your joint bank account with your spouse, that could cause issues.
Is Filing For Joint Bankruptcy a Better Idea?
There really is no good reason for either you or your spouse to file for bankruptcy while your divorce is ongoing. It only causes issues, which is why most lawyers would recommend that you file for joint bankruptcy before getting a divorce. This can help you avoid complications and ensure that one of you doesn’t get left stuck with a debt that you both took on.
If you and your spouse aren’t on great terms, you may not want to file for joint bankruptcy. If that’s the case, then filing individually after a divorce might be your next best option.
Meet With Our Divorce Attorneys
Going through a divorce is tough, so make sure that you have someone on your side who’s ready to advocate for you. Contact Butler, Giraudo & Meister, P.C. to schedule a consultation and learn more about what our team can do for you.
