Many couples cite financial troubles as a leading factor in their divorce, and filing for bankruptcy before or after divorce is quite common. However, the process isn't necessarily simple, and many factors influence whether you should file divorce or bankruptcy first and what chapter of bankruptcy is right for you. It's crucial to consult with a lawyer to ensure you're on the right track. Use this brief guide to help you sort out the initial details. 

Which Should You File First?

While your specific circumstances influence what decision will benefit you the most, most separating couples choose to file for bankruptcy before divorce. The main benefit of doing so is to save on legal fees and time. When filing as a couple, all of your information can be gathered at once, and you only need to pay one set of fees to file. This also comes with the potential of canceling more debt, as some jurisdictions allow double exemptions for assets like homes and cars. 

Filing for divorce first is ideal for when your joint income disqualifies you from bankruptcy, but your individual income will have you be eligible. You may also want to take this route if finalizing your divorce is your top priority or needs to be done on a timeline as bankruptcy takes at least a few months. 

The Different Types of Bankruptcy

Chapter 7

Chapter 7 bankruptcy is designed to quickly liquidate your unsecured debts, including medical and credit card debt, and get you back on your feet as soon as possible. It can take between three and six months from start to finish. Because it's a relatively quick process and doesn't involve repayment, most couples choose this option. If you can wait just a few months before filing your divorce, Chapter 7 may be ideal for you.

Chapter 13

In contrast, Chapter 13 bankruptcy presents a much longer process, and it can take three to five years in total to file your case and complete your payment plan. Filing for divorce during the repayment process can also complicate your repayments and drag your bankruptcy out further. 

If you're looking for a lawyer to represent your bankruptcy or divorce, reach out to McMahan Law Firm, PLLC in Elizabethtown, KY. For over 10 years, this experienced lawyer has helped couples sort their finances and file for divorce. Learn more about the office's services online, and call (270) 986-7908 to schedule a consultation.