{"id":352192,"date":"2014-08-20T06:00:53","date_gmt":"2014-08-20T12:00:53","guid":{"rendered":"https:\/\/www.creditrepair.com\/blog\/?p=352192"},"modified":"2022-04-21T10:17:56","modified_gmt":"2022-04-21T16:17:56","slug":"divorce-and-filing-bankruptcy-how-theyre-connected","status":"publish","type":"post","link":"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/","title":{"rendered":"How Divorce and Filing Bankruptcy are Connected"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n

=<\/p>\n

The top reasons for filing bankruptcy are job loss, medical bills and divorce.\u00a0 One of the top reasons for divorce is often money trouble.\u00a0 As a result, it\u2019s not uncommon for couples to decide to file bankruptcy right after they get divorced.\u00a0 But if a couple\u2019s financial situation is that dire, might it be a good plan to file bankruptcy together before<\/i> getting divorced?<\/p>\n

Things to Consider<\/strong><\/span><\/h2>\n

Whether or not you decide to file before or after a divorce depends on 6 main things:<\/p>\n

    \n
  • You need to determine what kind of bankruptcy you want to file, a Chapter 7 or Chapter 13.<\/li>\n
  • State exemption laws: all property you own is declared either exempt or non-exempt during a bankruptcy.\u00a0 Exempt property may be kept after the case has concluded.\u00a0\u00a0 Depending on where you live, you may get extra exemptions if you file jointly.<\/li>\n
  • State laws concerning division of property during a divorce could be at odds with what property is exempt in a bankruptcy.\u00a0 In other words, the items you fought to keep after your marriage ends could be in jeopardy once again in subsequent bankruptcy proceedings.<\/li>\n
  • The cost for filing a joint bankruptcy is the same as filing an individual one.\u00a0 This means you can save hundreds of dollars by filing together.<\/li>\n
  • If you file together, both of your incomes are used to qualify you for a Chapter 7 \u00a0\u2013 too much renders you ineligible.<\/li>\n
  • Filing bankruptcy jointly implies that you can work together, something that may not be possible if your relationship is acrimonious.<\/li>\n<\/ul>\n

    Deciding on a Chapter 7 or a 13 Bankruptcy<\/strong><\/span><\/h3>\n

    A Chapter 7 bankruptcy takes a much shorter period of time, as little as 3 or 4 months.\u00a0\u00a0 A Chapter 13 typically lasts 3 to 5 years, so if you want to file for bankruptcy before divorce, a Chapter 7 may be the best way to go.<\/p>\n

    \"shutterstock_199347314\"<\/p>\n

    Exemptions<\/strong><\/span><\/h3>\n

    There are two systems of exemptions in U.S. bankruptcy court, state and federal.\u00a0 State law dictates which exemption system to use, or allows you to pick one or the other.\u00a0 Exemptions are specific to the types of property being exempted, like homes or autos, rather than the dollar value of an item. \u00a0Homestead exemptions determine what part of the equity in your home is protected from creditors.\u00a0 Some state homestead exemptions are quite generous, most notably Florida and Texas, which allow unlimited equity in your home after a bankruptcy.<\/p>\n

    In some states, filing bankruptcy jointly allows your to double the amount of exemptions. \u00a0If you are filing a joint bankruptcy, you may get to keep more property overall than if you had filed separately.<\/p>\n

    In a Chapter 7 bankruptcy, you will have to sell any property that is non-exempt.\u00a0 In a Chapter 13 bankruptcy, you get to keep all non-exempt property.\u00a0 But exemption still matters in a Chapter 13.\u00a0 In your Chapter 13 repayment plan, you must pay your unsecured creditors an amount equal to your non-exempt property.\u00a0 So the more you can exempt, the less you have to pay back (and the less time you spend in bankruptcy).<\/p>\n

    Income<\/strong><\/span><\/h3>\n

    Filing a Chapter 7 bankruptcy requires you to pass a Means Test.\u00a0 The Means Test involves calculating whether or not you can afford to repay back all or a portion of your debt.\u00a0 If your joint income is too high, you will not qualify for a joint Chapter 7 bankruptcy.\u00a0\u00a0\u00a0 This is the case even if one spouse\u2019s income is low enough to qualify individually for a Chapter 7.\u00a0 The Means Test is based on household size and the limit for a household of two is not twice that of a single person household.\u00a0 \u00a0In this case, it might be better to wait until after a divorce to file or to file individually.<\/p>\n

    Property and Joint Debts<\/strong><\/span><\/h3>\n

    Divorce decrees divide up both property and debt.\u00a0 Lawyers get paid by the hour.\u00a0 Deciding which debts and property belong to which spouse can be both time consuming and costly in lawyer\u2019s fees.\u00a0 Why spend hundreds of dollars in legal fees determining division of debt and property when a bankruptcy could decide these matters for you?<\/p>\n

    In order to determine the best outcome from your bankruptcy and divorce, you must consider your state\u2019s exemption limits to make sure that all the property you both want to keep after a divorce is protected from a bankruptcy.<\/p>\n

    When it comes to determining debt responsibilities, divorce decrees don\u2019t absolve one spouse from a debt declared to be the other\u2019s joint property – creditors don\u2019t recognize divorce decrees on division of debt, no matter what lawyers tell you.\u00a0 \u00a0Filing a bankruptcy before you get divorced clears all unsecured debt obligations you may have, making it easier (and cheaper!) to get all debt division matters resolved.<\/p>\n

    Note:<\/b> if you file for divorce at the same time<\/i> as bankruptcy, your divorce may be put on hold because bankruptcy puts an automatic stay on property division.<\/p>\n

    Costs of Filing a Bankruptcy<\/strong><\/span><\/h3>\n

    The bankruptcy filing process has become much more complicated since the bankruptcy reform act of 2005.\u00a0 The average cost of filing a Chapter 7 bankruptcy has doubled, averaging now around $1500.\u00a0 However, a married couple may file jointly \u2013 two for the price of one.\u00a0 \u00a0You can also file jointly for a Chapter 13 bankruptcy – fees run between $2500 and $3000.\u00a0 \u00a0You don\u2019t need to be living together in order to file jointly in either case.<\/p>\n

    There are costs other than court fees and paying your lawyer.\u00a0 U.S. law requires you to attend pre- and post-bankruptcy counseling classes which run around $68 for single filer and $87 for a joint filer.\u00a0 \u00a0(Your lawyer\u2019s fees will not cover these costs.)<\/p>\n

    Cooperation is Key<\/strong><\/span><\/h2>\n

    Filing bankruptcy is stressful, and so is divorce.\u00a0 Doing both at the same time, or in rapid succession, is not for the faint of heart.\u00a0 Filing a bankruptcy requires teamwork; there is quite a bit of paperwork to fill out together. If you\u2019re not able to speak to each other with civility, filing bankruptcy jointly may be impossible.\u00a0 When you both sign up for the required bankruptcy education by paying one joint fee, they may tell you that you have to attend the training together \u2013 can you stand that much more time together?<\/p>","protected":false},"excerpt":{"rendered":"

    = The top reasons for filing bankruptcy are job loss, medical bills and divorce.\u00a0 One of the top reasons for divorce is often money trouble.\u00a0 As a result, it\u2019s not uncommon for couples to decide to file bankruptcy right after they get divorced.\u00a0 But if a couple\u2019s financial situation is that dire, might it be […]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[158],"tags":[219,225],"yoast_head":"\nHow Divorce and Filing Bankruptcy are Connected - CreditRepair.com<\/title>\n<meta name=\"description\" content=\"One of the top reasons for divorce is often money trouble. But if a couple\u2019s financial situation is that dire, might it be a good plan to file bankruptcy together before getting divorced?\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Divorce and Filing Bankruptcy are Connected\" \/>\n<meta property=\"og:description\" content=\"One of the top reasons for divorce is often money trouble. But if a couple\u2019s financial situation is that dire, might it be a good plan to file bankruptcy together before getting divorced?\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/\" \/>\n<meta property=\"og:site_name\" content=\"CreditRepair.com\" \/>\n<meta property=\"article:published_time\" content=\"2014-08-20T12:00:53+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-04-21T16:17:56+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.creditrepair.com\/blog\/wp-content\/uploads\/2022\/04\/more-national-retailers-signing-on-with-isis-mobile-wallet-system-1-3-600x200.png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Kristy Welsh\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.creditrepair.com\/blog\/#website\",\"url\":\"https:\/\/www.creditrepair.com\/blog\/\",\"name\":\"CreditRepair.com\",\"description\":\"We are the credit repair experts\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.creditrepair.com\/blog\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/#primaryimage\",\"inLanguage\":\"en-US\",\"url\":\"https:\/\/www.creditrepair.com\/blog\/wp-content\/uploads\/2022\/04\/more-national-retailers-signing-on-with-isis-mobile-wallet-system-1-3.png\",\"contentUrl\":\"https:\/\/www.creditrepair.com\/blog\/wp-content\/uploads\/2022\/04\/more-national-retailers-signing-on-with-isis-mobile-wallet-system-1-3.png\",\"width\":1500,\"height\":500},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/#webpage\",\"url\":\"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/\",\"name\":\"How Divorce and Filing Bankruptcy are Connected - CreditRepair.com\",\"isPartOf\":{\"@id\":\"https:\/\/www.creditrepair.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/#primaryimage\"},\"datePublished\":\"2014-08-20T12:00:53+00:00\",\"dateModified\":\"2022-04-21T16:17:56+00:00\",\"author\":{\"@id\":\"https:\/\/www.creditrepair.com\/blog\/#\/schema\/person\/9d17553fca137ac7dd52fdddee3e39d4\"},\"description\":\"One of the top reasons for divorce is often money trouble. But if a couple\u2019s financial situation is that dire, might it be a good plan to file bankruptcy together before getting divorced?\",\"breadcrumb\":{\"@id\":\"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.creditrepair.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"How Divorce and Filing Bankruptcy are Connected\"}]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.creditrepair.com\/blog\/#\/schema\/person\/9d17553fca137ac7dd52fdddee3e39d4\",\"name\":\"Kristy Welsh\",\"image\":{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/www.creditrepair.com\/blog\/#personlogo\",\"inLanguage\":\"en-US\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/dfa70ee711288ab00d6b5c0cf27ce8c7?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/dfa70ee711288ab00d6b5c0cf27ce8c7?s=96&d=mm&r=g\",\"caption\":\"Kristy Welsh\"},\"description\":\"So how is geeky Kristy Welsh (former rocket scientist and current software guru) also a credit expert? After being laid off from her career in Aerospace engineering, Welsh served a short stint as a mortgage professional in the early 90s. It was there she first learned how to fix people\u2019s credit in order to get her loans funded. When the Internet, recession and bankruptcy came knocking on her door all at about the same time, she learned web programming, database design and a lot more about credit and debt. As a hobby, and to fill a need in the credit knowledge deficit of the average person, Welsh founded CreditInfoCenter.com in 1997. From daily research and correspondence with the credit and debt challenged, Welsh turned the original 9-page site into a personal finance information powerhouse. In 2001, Welsh published Good Credit is Sexy, a tongue in cheek guide to restoring credit. The book is now in its 4th edition. In November 2013, Welsh retired from CreditInfoCenter.com and was subsequently approached by CreditRepair.com to continue her conversation with the American public regarding all things credit and debt.\",\"sameAs\":[\"http:\/\/www.creditrepair.com\"],\"url\":\"https:\/\/www.creditrepair.com\/blog\/experts\/kristy-welsh\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"How Divorce and Filing Bankruptcy are Connected - CreditRepair.com","description":"One of the top reasons for divorce is often money trouble. But if a couple\u2019s financial situation is that dire, might it be a good plan to file bankruptcy together before getting divorced?","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/","og_locale":"en_US","og_type":"article","og_title":"How Divorce and Filing Bankruptcy are Connected","og_description":"One of the top reasons for divorce is often money trouble. But if a couple\u2019s financial situation is that dire, might it be a good plan to file bankruptcy together before getting divorced?","og_url":"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/","og_site_name":"CreditRepair.com","article_published_time":"2014-08-20T12:00:53+00:00","article_modified_time":"2022-04-21T16:17:56+00:00","og_image":[{"url":"https:\/\/www.creditrepair.com\/blog\/wp-content\/uploads\/2022\/04\/more-national-retailers-signing-on-with-isis-mobile-wallet-system-1-3-600x200.png"}],"twitter_card":"summary_large_image","twitter_misc":{"Written by":"Kristy Welsh","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebSite","@id":"https:\/\/www.creditrepair.com\/blog\/#website","url":"https:\/\/www.creditrepair.com\/blog\/","name":"CreditRepair.com","description":"We are the credit repair experts","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.creditrepair.com\/blog\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"ImageObject","@id":"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/#primaryimage","inLanguage":"en-US","url":"https:\/\/www.creditrepair.com\/blog\/wp-content\/uploads\/2022\/04\/more-national-retailers-signing-on-with-isis-mobile-wallet-system-1-3.png","contentUrl":"https:\/\/www.creditrepair.com\/blog\/wp-content\/uploads\/2022\/04\/more-national-retailers-signing-on-with-isis-mobile-wallet-system-1-3.png","width":1500,"height":500},{"@type":"WebPage","@id":"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/#webpage","url":"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/","name":"How Divorce and Filing Bankruptcy are Connected - CreditRepair.com","isPartOf":{"@id":"https:\/\/www.creditrepair.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/#primaryimage"},"datePublished":"2014-08-20T12:00:53+00:00","dateModified":"2022-04-21T16:17:56+00:00","author":{"@id":"https:\/\/www.creditrepair.com\/blog\/#\/schema\/person\/9d17553fca137ac7dd52fdddee3e39d4"},"description":"One of the top reasons for divorce is often money trouble. But if a couple\u2019s financial situation is that dire, might it be a good plan to file bankruptcy together before getting divorced?","breadcrumb":{"@id":"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.creditrepair.com\/blog\/finance\/divorce-and-filing-bankruptcy-how-theyre-connected\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.creditrepair.com\/blog\/"},{"@type":"ListItem","position":2,"name":"How Divorce and Filing Bankruptcy are Connected"}]},{"@type":"Person","@id":"https:\/\/www.creditrepair.com\/blog\/#\/schema\/person\/9d17553fca137ac7dd52fdddee3e39d4","name":"Kristy Welsh","image":{"@type":"ImageObject","@id":"https:\/\/www.creditrepair.com\/blog\/#personlogo","inLanguage":"en-US","url":"https:\/\/secure.gravatar.com\/avatar\/dfa70ee711288ab00d6b5c0cf27ce8c7?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/dfa70ee711288ab00d6b5c0cf27ce8c7?s=96&d=mm&r=g","caption":"Kristy Welsh"},"description":"So how is geeky Kristy Welsh (former rocket scientist and current software guru) also a credit expert? After being laid off from her career in Aerospace engineering, Welsh served a short stint as a mortgage professional in the early 90s. It was there she first learned how to fix people\u2019s credit in order to get her loans funded. When the Internet, recession and bankruptcy came knocking on her door all at about the same time, she learned web programming, database design and a lot more about credit and debt. As a hobby, and to fill a need in the credit knowledge deficit of the average person, Welsh founded CreditInfoCenter.com in 1997. From daily research and correspondence with the credit and debt challenged, Welsh turned the original 9-page site into a personal finance information powerhouse. In 2001, Welsh published Good Credit is Sexy, a tongue in cheek guide to restoring credit. The book is now in its 4th edition. In November 2013, Welsh retired from CreditInfoCenter.com and was subsequently approached by CreditRepair.com to continue her conversation with the American public regarding all things credit and debt.","sameAs":["http:\/\/www.creditrepair.com"],"url":"https:\/\/www.creditrepair.com\/blog\/experts\/kristy-welsh\/"}]}},"_links":{"self":[{"href":"https:\/\/www.creditrepair.com\/blog\/wp-json\/wp\/v2\/posts\/352192"}],"collection":[{"href":"https:\/\/www.creditrepair.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.creditrepair.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.creditrepair.com\/blog\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.creditrepair.com\/blog\/wp-json\/wp\/v2\/comments?post=352192"}],"version-history":[{"count":5,"href":"https:\/\/www.creditrepair.com\/blog\/wp-json\/wp\/v2\/posts\/352192\/revisions"}],"predecessor-version":[{"id":362219,"href":"https:\/\/www.creditrepair.com\/blog\/wp-json\/wp\/v2\/posts\/352192\/revisions\/362219"}],"wp:attachment":[{"href":"https:\/\/www.creditrepair.com\/blog\/wp-json\/wp\/v2\/media?parent=352192"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.creditrepair.com\/blog\/wp-json\/wp\/v2\/categories?post=352192"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.creditrepair.com\/blog\/wp-json\/wp\/v2\/tags?post=352192"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}