Bankruptcy & Divorce: How to Handle Both Without Losing Everything
Filing bankruptcy and starting the divorce process are two incredibly stressful and life-changing decisions. Choosing to go through both of these major life changes at the same time can take up an enormous amount of time and mental energy. However, if you know that both of these steps are inevitable, deciding which one to pursue first depends largely on your circumstances and goals. That’s where we step in to help. At Ewaniszyk Law Firm, we have teams of bankruptcy attorneys and family law professionals who can help you get your life in order.
Located in the High Desert, Ewaniszyk Law Firm has the experience and knowledge needed to tackle your most challenging legal concerns. The choice to file bankruptcy is one that can give you a fresh financial start, but it’s important to know how the fallout may affect your credit and overall financial stability. Let’s talk. Call us at 760-245-7310 to set up a consultation now.
Should You File Bankruptcy Before or After Divorce?
There are benefits on both sides, so it ultimately comes down to your situation and finances. First, let’s talk about filing for bankruptcy first. When you and your spouse file for Chapter 7 together, your qualifying debts are wiped out in one fell swoop. This can significantly streamline the divorce process when you then file for divorce, as you no longer have marital debts to divide up and budget for. Transitioning from one to two households is already a financial challenge; trying to shoulder half of the marital debt only makes it harder. It’s important to note, though, that going this route does require cooperation between the spouses until the bankruptcy is complete. If your pending divorce is so adversarial that you can’t speak to each other without a fight, navigating a legal process like bankruptcy together could be tough—although working with a bankruptcy law firm that handles everything can help you minimize direct contact.
In some cases, it makes sense to file for divorce before filing for bankruptcy. If your joint income is too high to qualify you for Chapter 7 bankruptcy, you may find that divorcing first allows you both to qualify. This is often the case when one partner earns all or most of the household income. Your bankruptcy lawyer can help you determine if you can qualify when married or not.
Protecting Property and Assets
When deciding whether to pursue bankruptcy or divorce first, it’s important to look at how your property will be handled in bankruptcy. California is the only state in the country with two exemption systems, which gives you some wiggle room when it comes to keeping your assets from being sold to pay off your debt. These are generally split up into 703 and 704 exemptions. The amount of property you and your spouse have, both together and separately, may help you determine whether you want to file for bankruptcy or divorce first. For example, if you have a substantial amount of property you want to exempt—more than would be allowed under Chapter 7—you may both be able to exempt more separately by divorcing first. However, California exemptions are fairly generous, so this is not often necessary.
Preparing for the Financial Fallout of Bankruptcy and Divorce
Bankruptcy and divorce will both have a dramatic effect on your finances. This isn’t to say that you shouldn’t consider bankruptcy—your bankruptcy attorney can explain how bankruptcy can actually put you on better financial footing—but that you should be prepared for how it may impact you. For example, if you need to find a new place to live due to divorce, having a recent bankruptcy on your credit report could make it very difficult to find a rental. This is particularly true in a hot market like California. On the other hand, filing bankruptcy first may shield you from some of the worst financial effects of divorce. When you don’t have to worry about payments on personal or community debt, you can better navigate the financial demands of life as a single person.
Discuss Your Options With Our Bankruptcy Law Firm
If you’re not sure how to approach bankruptcy and divorce in a way that sets you up for future financial success, it’s time to talk about your concerns with a bankruptcy lawyer. Schedule a confidential consultation at Ewaniszyk Law Firm now by calling us at 760-245-7310 or getting in touch online.
Mr. Ewaniszyk was first admitted to practice law in 1982 and he lived and raised his family in the High Desert since 1986. He has successfully represented hundreds of clients each year suffering from serious and catastrophic personal injuries, those accused of criminal offenses, people going through divorce and family law matters, and families facing bankruptcy. Mr. Ewaniszyk has tried many cases in both Federal and State Courts during his extensive career and previously served for five years as the City Attorney for the City of Adelanto. Learn more here.