Divorce and Bankruptcy 2 choices – which is best for you?
Can you file for Bankruptcy and Divorce at the same time?
Divorce and Bankruptcy
A divorce and bankruptcy often occur at the same time. Depending on your situation, you may be better off filing one first, then the other. Which comes first? It depends on your individual circumstances. Divorce and bankruptcy are related, and it can be hard to find an attorney who has a deep understanding of how the two area of law interact.
Depending on issues like property division, alimony (spousal support), child support, and income of husband and wife, you might file the bankruptcy first, making it easier to deal with debt.
Or, sometimes the divorce needs to come first, in order to achieve goals like passing the means test, or preventing an unwanted level of support payments. Many attorneys have discussed this important topic.
File for divorce and bankruptcy at the same time
Generally you do not want to file for divorce and bankruptcy at the same time. When you file for bankruptcy, the automatic stay could keep your divorce from moving forward.
You can get “relief from automatic stay” to allow the divorce to proceed, but this may not be allowed, depending on what assets the married filers have. The trustee may be interested in the property if there is non-exempt equity.
Filing both cases simultanteously is allowed, but you may not be able to do it with the same lawyer. If your situation is amicable, and you have a short-term marriage, and very little to divide, then you may be able to get one lawyer to take your case as a joint case.
Filing a joint bankruptcy case with one lawyer will save money. But there are risks.
Some lawyers will not want to file a joint case due to potential conflict of interest. You might want to “waive the conflict” by signing a document for the bankruptcy attorney that states you want one attorney to represent you both.
In a joint bankruptcy case one attorney has two clients, and they may not have materially adverse interests. If this is your situation, divorce and bankruptcy may work well together.
Sometimes adverse interests can arise during the case, and when this happens, the “joint” attorney will have to withdraw, and both parties then will need to hire separate bankruptcy attorneys.
If you want to save money by hiring one attorney to do a joint bankruptcy case, be sure you can finish the case without problems.
Chapter 7 and Divorce is fastest way
Many people favor chapter 7 bankruptcy if a divorce is contemplated. There are some good reasons for filing chapter 7 before getting a divorce but there are also some serious pitfalls that many attorneys even seem to be oblivious to.
One Federal Bankruptcy Judge I spoke with regarding these pitfalls told me he sees “malpractice in my Court all the time.”
Although the fastest way may not be the best way, if your situation is uncomplicated, a joint chapter 7 bankruptcy and divorce filed thereafter may be a good choice.
You’ll definitely need to check with a board certified bankruptcy specialist first. Ideally, you’ll find a bankruptcy attorney who also has experience in divorce law.
Divorce and Bankruptcy – a problem for many attorneys
The intersection between these two practice areas is very complex. There are many pitfalls to avoid. I’ve seen pensions lost because of obscure case-law based considerations that were supposed to be divided in the divorce.
It is not uncommon for divorce lawyers to seek the advice of a bankruptcy attorney. They want to be sure the paperwork is right, so that the desired outcome is obtained for both clients.
If you’re considering divorce and bankruptcy at the same time, you should consult a board certified bankruptcy specialist who also has years of experience in divorce law. Richard West has been handling these cases for over thirty years. Other attorneys often consult Richard West to assist with these complex legal issues.
When you’re ready to take the next step, call West Law Office for a free consultation. We offer in-office, video and telephone appointments.
Call today; you’ll sleep better tonight.
We can do your entire case online.
Up Next: Divorce and Chapter 7.