One of the most difficult situations to be in is when you realize that both your marriage and pocket book are in shambles. A common question from those in these situations is whether it is better to file bankruptcy first or the divorce. While there is no answer that is true in all cases, I often recommend that both the husband and wife file bankruptcy prior to the divorce. This usually makes the divorce process easier as it eliminates the need to divide the debt.
Some of the legal issues to consider when determining whether to file the bankruptcy before the divorce is what bankruptcy chapter the parties qualify for before and after the bankruptcy. Usually, those who come into my office want to file chapter 7 bankruptcy. Sometimes the increased living expenses that come with separation allow both the spouses to file for chapter 7. Other times, however a spouse needs the extra cost of child or spousal support to qualify for a chapter 7. If there is a qualification issue then sometimes it is best to file bankruptcy after the divorce.
The one thing I would not recommend is that the parties file a joint chapter 13 prior to getting a divorce. The chapter 13 requires regular monthly payments to the bankruptcy court for 3-5 years. And when the two parties are constantly feuding, setting up a legally required monthly obligation is not a wise course of action. Often what happens is one party foolishly decides to withhold their portion of the chapter 13 payment until the other spouse gives into their demands as it relates to visitation time or payment of expenses, thereby jeopardizing the bankruptcy for both of them.
If you have questions about the legal issues surrounding bankruptcy and divorce, call Benjamin Skinner, experienced Arizona bankruptcy attorney for your free consultation today! (480) 648-8975.