One of the leading causes of divorce is financial problems. It should come as no surprise that as a couple comes to the decision to end their marriage, they may also be considering filing for bankruptcy. Deciding whether to file for bankruptcy before or after a divorce is a complex and critical decision that can have significant financial and legal implications for both parties involved. While there is no one-size-fits-all answer to this question, several factors should be carefully considered before making this decision. An Illinois divorce lawyer familiar with bankruptcy laws can help you with this decision.
Joint vs. Individual Debt
One of the primary factors to consider is the nature of the debt the couple has. If most of the debt is joint, meaning both spouses are responsible for it, filing for bankruptcy before the divorce may be more beneficial. This can help eliminate joint debts, reducing the potential for disputes during the divorce process. However, if most of the debt is in one spouse’s name, filing for bankruptcy individually may be a better option to protect the other spouse’s credit and assets.
Timing and Strategy
The timing of filing for bankruptcy can significantly impact the divorce proceedings. Filing before the divorce may simplify the property division process, as it eliminates or reduces the impact of certain debts. However, it may also delay the divorce proceedings, as the bankruptcy process can be time-consuming. Filing after the divorce could expedite the divorce process but may not offer the same level of debt relief.
Depending on the type of assets the couple has, filing for bankruptcy before the divorce may help protect those assets from being sold or liquidated to pay off debts. On the other hand, if one spouse expects to receive a substantial settlement or assets in the divorce, waiting until after the divorce to file for bankruptcy may be more strategic.
Filing for both bankruptcy and divorce can be expensive, involving attorney fees and court costs. Couples should weigh the financial burden of these processes against the benefits of resolving their financial issues through bankruptcy before or after the divorce.
Communication and Cooperation
The ability of both spouses to communicate and cooperate plays a significant role in the decision-making process. Filing for bankruptcy together before the divorce may require a high level of cooperation. Filing individually after the divorce might simplify the process but could lead to disputes over the debt division.
It is also important to consider the long-term impact on credit scores. Bankruptcy will negatively affect both spouses’ credit scores. However, filing before the divorce may allow for a faster credit recovery period for both parties, as they can begin rebuilding their credit sooner.
Contact a Lombard, IL Divorce Attorney for Legal Assistance
If you and your spouse are heading for divorce but are also thinking about filing for bankruptcy, call [[title]] at [[phone]] to schedule a free consultation. Our DuPage County, IL divorce lawyers have extensive experience dealing with bankruptcy and divorce cases and can help you decide which option is the best one for your situation.