Divorce & Bankruptcy

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Divorce & Bankruptcy in Charlotte

Which one should come first?

If you are like many people, an impending divorce may be the reason you are filing for bankruptcy. However, proper planning ahead can make a huge difference in your financial obligations after the divorce. At Schwilm Law Firm, PLLC, Attorney Schwilm has over 15 years' experience, over which time he has represented clients in thousands of Chapter 7 and Chapter 13 bankruptcy filings.

If you are filing for bankruptcy and divorce, you will need to carefully weigh your options before making a move, and we are happy to provide insight and direction into your case.

When Filing for Bankruptcy First Makes Sense

It is not uncommon for money troubles, or an extended period of unemployment to put a lot of strain on a marriage. In effect, financial problems frequently lead to bankruptcy and divorce. Whether you should file for bankruptcy before or after divorce will depend on a number of factors such as how much debt and property you have, and what type of bankruptcy you wish to file.

In many cases, filing for bankruptcy before divorce simplifies issues regarding debt and property division, and can result in lower divorce costs. A Chapter 7 discharges unsecured debts such as medical bills and credit card debt and the discharge can usually be obtained within 3 to 4 months.

In contrast, a Chapter 13 lasts from 3 to 5 years because of the Chapter 13 repayment plan. If you won't qualify for a Chapter 7 and you are considering filing a Chapter 13, it may make more sense to file individually after the divorce since it takes a long time to complete.

Debt division can be a stressful part of the divorce process, and ordering one spouse to pay a certain debt in a divorce decree doesn't change the fact that the other spouse is still obligated to pay that creditor. For example, if your spouse agrees to pay a debt in your divorce decree and fails to pay it, the creditor can still come after you to collect on the debt. In such cases, usually it is in everyone's best interests if both spouses file for bankruptcy in order to wipe out their combined debts before a divorce.

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Sometimes the timing for filing a Chapter 7 hinges on your income. If you wish to file jointly, your joint income may be too high to file a Chapter 7. In that case, you may have no other choice but to wait until each spouse has a separate household after the divorce to qualify under a Chapter 7.

If you are filing for divorce, you will need to discuss your options with a Charlotte bankruptcy attorney from Schwilm Law Firm, PLLC in a free case evaluation. After reviewing the facts of your case, we can help you determine which one you should file for first – divorce or bankruptcy.