It is not uncommon for individuals to put away a few hundred dollars to be used in the event of an emergency. Maybe the washing machine stops working or a leaky window finally needs to be replaced – these situations might be troublesome, but easily overcome. Unfortunately, there are numerous significant life events that could lead to significant financial peril.
Over the course of their lives, individuals might face job loss, medical emergencies or home repair disasters. The most common overlap between family law and bankruptcy, however, is divorce. An established couple will suddenly transition from one household with the potential buying power of two incomes, to two independent households. Additionally, it is not uncommon for money woes to have played a part in the demise of the relationship in the first place. Financial peril does not simply disappear.
The Bankruptcy Code was developed to help individuals and families alike find firm financial footing and a stable future. This can be accomplished by either eliminating unsecured debt or helping people reorganize and repay debt to avoid foreclosure and repossession. Generally selecting to pursue either Chapter 7 bankruptcy or Chapter 13 bankruptcy, couples have options to rebuild their financial strength. No matter the situation, however, it is wise to avoid going through the bankruptcy and divorce processes at the same time.
Which comes first?
Unfortunately, there is no golden rule regarding whether you should file for bankruptcy before divorce or vice-versa. The decision largely relies on your goals, the debt you wish to eliminate and the process duration you are willing to endure. Chapter 7 bankruptcy generally has a shorter duration and Chapter 13 lasts from 3 to 5 years. An experienced bankruptcy attorney can thoroughly examine your situation and provide the guidance and insight you need.
Many people live paycheck to paycheck, perched on the razor’s edge of financial instability. When divorce becomes a reality, however, this precarious balance often tips toward financial peril. It is wise to understand your bankruptcy options before making any final decisions.