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Which should I File First: Divorce or Bankruptcy?

Hudson County Alimony and Support Attorney | Jeffrey M. Bloom

Which should I File First: Divorce or Bankruptcy?

If you have amassed a significant amount of debt, you may be considering filing bankruptcy in order to get these debts discharged and gain a fresh financial start. Unfortunately, the bankruptcy process can be quite complex, especially when you are also in the middle of a divorce or contemplating filing for divorce.

Consequently, the timing of your filing may be crucial to achieving your desired outcome. Unfortunately, there’s no tried-and-true formula for which action to file first since every bankruptcy and every divorce possesses unique attributes.

It’s important to consider the following factors when deciding whether to file for divorce or bankruptcy first:

  • Income of each spouse — If one spouse has amassed a significant amount of debt while the other spouse earns a sizable income, you may not be able to qualify for a joint Chapter 7 bankruptcy since the bankruptcy trustee must take into account the entire household income when determining whether to approve your bankruptcy request. In this situation, it may be in your best interest to file for divorce first so that joint household income isn’t factored into your bankruptcy claim.
  • The consent of each spouse — In order to file for joint bankruptcy as a married couple, both spouses must agree to file. If your spouse doesn’t want to file bankruptcy, you won’t be able to force them to, regardless of whether a divorce action has been commenced. However, you may still be able to file for bankruptcy individually. If you choose to go this route, keep in mind that your bankruptcy case won’t discharge the debts of your spouse. If both you and your spouse would like to have your debts discharged, you should consider filing bankruptcy prior to initiating the divorce action.
  • Assets considered separate property possessed by each spouse — If your spouse has amassed a significant amount of assets that would be considered separate property (as opposed to jointly held assets that are considered marital property), you may want to consider filing bankruptcy individually. This would help you avoid having your bankruptcy request denied due to the presence of your spouse’s assets.
  • Marital property — Once you file for bankruptcy, all of your property (separate and marital) becomes part of the bankruptcy estate. This property won’t be able to be divided amongst you and your spouse as part of a property division agreement unless you receive permission from the bankruptcy trustee or until your bankruptcy case has been completed. In this situation, your divorce action would be significantly delayed while you move through bankruptcy.

Due to all of the complex factors involved in this decision, you should always discuss any possible plans for filing bankruptcy with Mr. Bloom during your initial consultation. Once you provide Mr. Bloom with detailed information regarding your assets, property and debts, he will be able to more accurately assess your situation and advise you as to the best way to proceed.

If necessary, Mr. Bloom will also work in conjunction with your bankruptcy lawyer in order to determine the best strategy for handling your pending divorce and bankruptcy actions.

Please contact the Law Offices of Jeffrey M. Bloom using the form at the top of the page or call (855) 208-3650 today to schedule your divorce consultation. Mr. Bloom serves clients in West New York, and throughout Hudson County and Bergen County, New Jersey.

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