Terenzini & Lucero, LLC
Terenzini & Lucero, LLC

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Can I file a divorce and bankruptcy at the same time?

On Behalf of | Jun 27, 2024 | Firm News |

Often, financial problems and marital problems go hand in hand. Maryland residents going through divorce frequently are also good candidates for a bankruptcy.

Thankfully, a person may do both around the same time. Since there are not rules against it, they may even file divorce case while a bankruptcy case is pending or vice versa.

As a word of caution, it is important to be transparent about one’s plans with both courts.

There are, however, some important considerations Rockville residents should think over when deciding what to do.

  • One may want to file bankruptcy before proceeding with a divorce to take advantage of being able to file a bankruptcy jointly as a married couple. Practically speaking, this saves costs.
  • More importantly, a joint bankruptcy can mean a couple filing a Chapter 7 will be able to protect more of their property through exemptions. On the other hand, a Chapter 7 could discharge most if not all the couple’s marital debts.
  • The spouses will want to make sure that their combined incomes will not preclude them from filing a Chapter 7. A Chapter 13 repayment plan which lasts for years may not be practical for a divorcing couple.
  • Filing bankruptcy before divorcing may simplify the divorce proceeding because the couple will have fewer debts to pay off.
  • A couple will need to cooperate if they wish to file a joint bankruptcy. They also need to be able to trust each other with respect to information about their assets and debts. One spouse’s dishonesty in a bankruptcy can affect the other spouse’s rights and, at best, could make that other spouse look bad.
  • There are some cases in which a joint bankruptcy will not make sense. For example, one spouse may have incurred significant debt for which they alone are liable. The other spouse may not want to damage their credit in this situation.
  • If a couple chooses to divorce first, they should remember that bankruptcy offers limited relief with respect to divorce-related debts. For example, a parent will certainly be expected to pay back child support.

Whether to file for a bankruptcy or a divorce first is a question that will depend on a person’s circumstances. The right answer will vary from person to person, which is why a Marylander should make sure they understand the legal option that is best for them.

Terenzini & Lucero, LLC.

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