The marriages of many Long Island couples suffer under financial distress.
Many might even think that financial problems and divorce go hand-in-hand, although of course martial problems are usually complicated and have many causes.
Because so many New Yorkers with troubled marriages also have troubled finances, they may benefit from filing for bankruptcy before or immediately after a divorce.
Every situation is different
Whether to file for bankruptcy in the wake of a divorce or exactly when to do so depends a lot on a person’s unique circumstances.
That being said, there are some general considerations that people should bear in mind:
- By filing for a Chapter 7 bankruptcy before a divorce, the couple can take advantage of double the bankruptcy exemptions in most situations. What this means is that the couple can eliminate a lot of their marital and individual debts while keeping more of their property. They can divide the leftover property in their divorce.
- Filing before a divorce costs less since the couple can file one joint petition for bankruptcy and use one attorney.
- Waiting until after divorce can cause problems in that some bills and debts handled during the divorce might not be dischargeable.
- Filing before divorce requires a degree of openness and cooperation between the couple. If the couple is not getting along, or one person does not feel like the other has been honest about their income, assets, and debts, it may be best to wait to file for bankruptcy individually.
- On a related point, couples should remember that if they need to file a Chapter 13, they are going to have to be able to cooperate for years while the bankruptcy is ongoing.
- Sometimes, it is better to wait to file individually so that a person can qualify to file for a Chapter 7 and not be forced into filing a Chapter 13 because, between themselves and their estranged spouse, they make too much income.
New Yorkers who are experiencing financial trouble in the middle of marital problems should explore their options with an experienced bankruptcy attorney. They should do so before making any important decisions.