I’m Going Through a Divorce – Can I Still File for Bankruptcy?

Many marriages fall apart due to financial stress and struggles. In addition, ending a marriage can be a financial burden that causes you to amass significant debt. If you are going through a divorce, can you still seek debt relief through the bankruptcy process? 

The answer to this question will depend on your specific situation, and you should consult with a Northwest Indiana bankruptcy law firm as soon as possible.

Filing a Joint Petition

In many cases, married couples have debts that are joint, as well as each spouse having their own individual debts. If both spouses think they want to file for bankruptcy, they can file a joint bankruptcy petition as long as the divorce is not yet final. A joint petition allows you to wipe out both of your debts with only one set of filing fees and attorney costs. A joint petition can also allow you to double many of the bankruptcy exemptions for a Chapter 7 case, which can be highly beneficial. 

Chapter 7 is a relatively quick process – usually up to six months – so you could put your divorce on hold until the bankruptcy process wraps up first. However, if you do not qualify for Chapter 7 because you earn too much income, or you have too much property that will be vulnerable in Chapter 7 liquidation, you might need to file under Chapter 13. This type of case will last for three to five years, and you might not want to have an ongoing legal matter with your ex-spouse for that long. Discuss a possible joint petition with your bankruptcy attorney in either situation. 

Simplifying Property Distribution

Indiana divorce laws require divorcing couples to divide their property in an equitable manner. This includes real property, personal property, assets, and, of course, your marital debts. These are not only debts that are joint accounts, but also include separate debts acquired during the marriage. Who will have to pay what debts is a major sticking point in many divorces, and the dispute can delay the process and use up more resources. 

If you file for bankruptcy before you finalize your divorce, you can likely get rid of many of your debts, as well as your spouse’s, if you file together. This can substantially simplify the division of property because most of your debts will be discharged in the bankruptcy process. 

Filing Bankruptcy After Divorce

If you do not want to file bankruptcy with your soon-to-be-ex-spouse or your divorce is already finalized, it is not too late to file on your own. If your divorce is over, you will know exactly what financial resources and debts you are dealing with, and our attorneys can advise whether bankruptcy is a good solution at this time. 

Learn More From an Indiana Bankruptcy Attorney

Piling financial concerns on top of a divorce can be overwhelming, but the legal team of Whitten & Whitten is ready to help and provide support and solutions. Contact us to learn more about your options.