Pelley Law Office LLP
Dallas Office
Plano Office
Sherman Office
214-733-1775
972-608-0335
903-813-4778

No Charge For Initial Consultation ($250 value)

Menu Contact

Over 80 Years Of Combined Experience

View Our Practice Areas

The Intersection of Bankruptcy and Divorce

As the old saying goes, "When it rains, it pours." Many people going through the emotionally-intense divorce process also face significant debt, especially in this economy. The thought of dividing your property and debt during your divorce can make things seem impossible. Should you file for bankruptcy? If so, when is the best time to file?

Many people fear that filing for bankruptcy will not only make their lives more difficult during an already difficult time, but will also lead to more challenges in the future. What they do not realize is that bankruptcy can offer a fresh financial start - a positive change.

Bankruptcy Before or After Divorce?

If you decide to file for Chapter 7 or Chapter 13 bankruptcy, should you file before or after your divorce? The answer: it depends on a number of factors.

If you file for bankruptcy before divorce, you and your spouse can file together. This means you will only have to pay one bankruptcy filing fee. After divorce, you must file separately. However, filing bankruptcy before divorce also means that both of your incomes will be combined in determining whether you are eligible for Chapter 7 bankruptcy (through the Chapter 7 means test).

Waiting to file for bankruptcy until after your divorce raises one other significant issue. If the debts you jointly hold with your ex-spouse are discharged during bankruptcy and your ex-spouse does not file for bankruptcy, he or she may still be liable for those debts.

Bankruptcy During Divorce

If you file for bankruptcy during your divorce, you will not be able to divide property until after the bankruptcy proceedings are complete. This is due to an "automatic stay," which puts certain lawsuits against a debtor on hold during bankruptcy. This is important because property division includes dividing debts. Since those debts may be discharged during bankruptcy, property division could be much simpler after the bankruptcy.

If you are considering divorce and bankruptcy, an attorney experienced in both family law and bankruptcy law can help you take the right steps toward a fresh start.

No Comments

Leave a comment
Comment Information

Awards & Recognition

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Office Locations

Plano office
Sherman office
Dallas office

Plano Office
1312 14th Street, Suite 100
Plano, Texas 75074

Phone: 972-608-0335
Map & Directions

Sherman Office
905 North Travis Street
Sherman, Texas 75090

Phone: 903-813-4778
Map & Directions

Dallas Office
6060 North Central Expressway, Suite 602
Dallas, Texas 75206

Phone: 214-733-1775
Map & Directions