Money troubles often strain marriages to the breaking point. In fact, financial stress ranks among the leading causes of divorce. For most North Carolina spouses, economic strain gets worse after they go separate ways.
But when overwhelming debt coincides with ending a marriage, many couples face difficult decisions about timing these major life changes. Understandably, the emotional and financial toll can feel overwhelming.
Yet understanding your options for handling both bankruptcy and divorce can help you make clearer choices while avoiding potential pitfalls.
Things to consider about the timing
Timing is critical when considering bankruptcy and divorce. For some couples, filing a joint bankruptcy before divorce makes sense, especially if you’re still on good terms.
A joint petition can discharge qualifying debts for both spouses, simplifying the divorce process by reducing financial issues to be decided in court. Plus, it often costs less than filing separately.
However, filing separately might be a better option if one spouse needs immediate relief from debt or if the debts are only in one spouse’s name.
Additionally, if your joint income disqualifies you from Chapter 7 bankruptcy, waiting until after divorce to file individually could be beneficial. This strategy allows each spouse to qualify based on their income alone.
What are the economic impacts for spouses?
Bankruptcy can significantly impact both parties, not just financially but also emotionally. Filing can provide a fresh start by wiping out unsecured debts like credit card balances. It can also affect your credit score, which is crucial when considering future financial stability.
In terms of divorce, bankruptcy can streamline the property division process. By eliminating joint debts beforehand, you reduce the complexity of dividing assets and liabilities. However, ensuring you can claim enough exemptions to protect your shared property when filing jointly is vital.
Experienced bankruptcy guidance is essential
The role of an experienced bankruptcy attorney is invaluable in this process. A skilled lawyer can guide you through the options with greater confidence, determining the best path forward. They can assist in planning the timing, helping you avoid conflicts and additional costs.
Ultimately, deciding whether to file for bankruptcy or divorce first depends on your unique circumstances. By understanding the potential impacts and planning carefully, you can take control of your financial future and begin the next chapter with a straightforward direction.
