The interplay of bankruptcy and divorce
When New York residents are having trouble paying their debts, it may be worthwhile to file for bankruptcy. However, for those who are also thinking about a divorce, it may be difficult to decide whether to file for bankruptcy while still married or after the split is finalized. The answer to that question depends largely on the facts of a given case.
The joint income of a couple will be considered when filing for a joint Chapter 7 bankruptcy. Therefore, those who have a small income on their own may benefit more from waiting until the divorce has finalized.
The same is true for those who may believe that their spouse will not consent to the bankruptcy, as in a joint filing, both spouses must consent to the move. In addition, the property of a debtor who has filed for bankruptcy becomes part of the bankruptcy estate and thus is unable to be divided during divorce property division withouth the consent of the bankruptcy judge.
Many marriages break down because of financial stresses that lead to arguments. A person who is facing the end of a marriage and who is considering the possibility of filing for Chapter 7 bankruptcy may wish to discuss the matter with an attorney. As the chapter requires a means test to be satisfied, there may be issues of timing that are related to the amount of income or assets that the couple has. In addition, there are other eligibility requirements associated that must be satisfied. An attorney who has experience with these matters can explain those requirements during an exploration of other debt relief alternatives that may be available.