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Is it Better to File Bankruptcy Before or After Divorce?


A typical divorce case does not exist. Each case is unique, with complex elements such as child custody, spousal support and the division of assets setting them apart. One matter that could complicate a divorce case in Colorado is the desire to declare bankruptcy. Whether you should file bankruptcy before or after your divorce depends on your unique circumstances. If you are considering filing for bankruptcy at the same time as a divorce case, speak to a qualified and local divorce expert in Colorado for counsel.

Chapter 13 vs. Chapter 7 Bankruptcy

The right solution for you will depend on many factors, including the type of bankruptcy you wish to file. The two main types of bankruptcies for individuals are Chapter 13 and Chapter 7. A Chapter 13 bankruptcy is suitable for people who wish to reorganize their debts and assets, while Chapter 7 will liquidate assets and use them to pay off debts. If you have limited income and know you cannot repay your debts, Chapter 7 might be the right choice. If you believe debt reorganization and a payment plan are all you need to dig yourself out of debt, choose Chapter 13 instead.

The type of bankruptcy you choose can make a difference in your divorce case. While you will eliminate debts with both types of bankruptcies, you may want to file at different times depending on the situation. If you wish to file for Chapter 13 bankruptcy and begin a 3-to-5 year repayment plan, for example, it may be best to file after the divorce. Filing before divorce could mean you and your soon-to-be-ex spouse must work together to keep up with the repayment plan for the next few years. If you do not wish to stay connected to your ex-spouse in this way, file Chapter 13 bankruptcy after a judge finalizes your divorce.

If Chapter 7 is a better fit for your financial situation, you may want to file for bankruptcy before your divorce. This can erase marital debts and liquidate assets before you and your spouse enter into property division negotiations. Filing before your divorce can make for a simpler property division process. It can also help you start with a clean slate once you finalize your divorce. You should wait to file for Chapter 7 until after your divorce, however, if you desire this type of bankruptcy but do not qualify because your income is too high. Waiting until after your divorce could lower your assets enough to qualify for Chapter 7 bankruptcy.

It Is Generally Best to Deal With Debts Before Divorce

Although the answer is not one-size-fits-all, in general, your goal during a divorce case should be to make the process as simple and streamlined as possible. A simple divorce process will save you time and money. Eliminating assets and debts that could create conflict between you and your spouse can simplify your divorce. If you have a mountain of debt, filing for bankruptcy before a divorce could eliminate an issue you would otherwise have to negotiate with your spouse. Filing bankruptcy before the finalization of your divorce could make the subsequent process simpler for all parties involved.

Speak to a Divorce Attorney in Colorado

The information here barely scratches the surface of bankruptcy and divorce. These are complex topics that deserve attention from an attorney. If you or your spouse are considering filing for bankruptcy and divorce around the same time, speak to a lawyer before making any decisions. What is best for you, your situation and your family will depend on the specific circumstances. For some people and financial situations, filing for bankruptcy before a divorce may make the latter process simpler. In other cases, filing after divorce may make the most sense, so the parties can first go their separate ways and then deal with finances. It is important to contact a divorce lawyer for tailored advice before you make any decisions.


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