“Love and Marriage…Love and Marriage…” the song says, “you can’t have one without the other.” Well, sometimes Bankruptcy and Divorce go hand in hand as well. Often times, if the couple is able to get along well enough through the bankruptcy proceedings before the divorce is finalized it is much better for the man, wife, future partners, and/or children going forward in the future.
Most of the time, if there was debt incurred during the course of the unsuccessful marriage then both husband and wife are going to be co-obligated on the debts. Which typically means that if they get the divorce first before filing bankruptcy, then they are going to have to each file their own individual bankruptcies and pay double the attorneys fees.
For example, take a typical scenario where husband makes most of the money. Say, $72,000. Wife only stays at home with the two kids because it never made sense for her to work since child care is so expensive. Well, husband and wife just aren’t in love anymore and cannot get along and want a divorce. They have $40,000 worth of credit card debt. The means test that largely determines whether a debtor files a Chapter 7 bankruptcy versus a Chapter 13 bankruptcy looks first to see what the family’s size is and what the total income is for the family.
If the disgruntled couple files bankruptcy in Collin County before they get divorced, then since they are a family of four grossing $6,000 a month and they will pass the means test and be eligible for a Chapter 7. If they divorce before, and husband is ordered by the divorce court to pay $2,000 a month to the wife and he moves into an apartment, he may be forced to file a Chapter 13 bankruptcy and repay some or all of the debt. Wife is still going to be eligible for a Chapter 7, but she has to pay the attorney’s fees whereas they could have split one bankruptcy fee had they filed bankruptcy first rather than each having to get their own bankruptcy attorney and pay double the fees if the divorce is completed first.