Deciding to file for divorce isn't always easy, but discovering that you need to file for both divorce and bankruptcy can be particularly complex and difficult. The decision about when to file for bankruptcy largely depends on you and your spouse's individual financial situations. Here are a few things to keep in mind as you talk to your lawyers.

Filing Chapter 7 After The Divorce

If you don't make a sizable income, filing for divorce first might make more sense for you. While your spouse may be required to file chapter 13, your lower income might qualify you to file for chapter 7. The key difference between the two types of bankruptcy is that you won't have to agree to a payment plan with chapter 7, so you can have the debts in your name wiped clean without having to pay them over the next few years.

Filing Chapter 13 Before The Divorce

If both you and your spouse only qualify for chapter 13, you should consider filing jointly before the divorce is finalized. If you have to file chapter 13 based on your income, you may be able to increase your exemptions. These exemptions help to lower the payments you and your spouse will have to make to satisfy the terms of the bankruptcy. You'll also get the benefit of having all the debt taken care of in one bankruptcy case, which makes things less complicated when you go to file divorce. Remember that the entire bankruptcy case must be completed before you file.

Filing Chapter 7 Before The Divorce

You may consider filing chapter 7 before you divorce if only one of you made the majority of the income, as this may allow you to avoid chapter 13. With chapter 7, you and your spouse can have your debts wiped clean without having to make joint payments after the divorce. This can be a great way to eliminate an underwater mortgage or expensive car payment, absolving you of the debt without having to determine who has to buy the other person's portion of the debt during the divorce.

The key to determining how to file divorce and bankruptcy is to try to discuss it as amicably as possible. Work together to find the option that is most advantageous for both of you so you can proceed with both cases to get the best possible outcome. If you and your spouse don't feel you can negotiate together, ask your lawyers to step in to help arbitrate the situation. 

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