When you are ready to file for bankruptcy, you need to look into your life circumstances to determine if now is the best time to file. There are some situations that mean that you have to make difficult decisions about which matters to handle first. Divorce is one of these. We know that you might want to get everything over with all at once, but this might not be possible.
A divorce and a bankruptcy usually can’t move forward at the same time. This is because the two cases collide in a way that puts one on hold. When you file for a bankruptcy, all of your assets and debts are included in an automatic stay. This means that the family law court is unable to sort through them for the purpose of property division. Your divorce will be put on hold pending the outcome of the bankruptcy.
At this junction, you have to decide if you want the divorce first or the bankruptcy first. There are benefits to both of these but you have to think about your life. One important fact that might make a difference is the type of bankruptcy you can file. Typically, a Chapter 7 bankruptcy is a faster option.
You could file a Chapter 7 bankruptcy and wait for it to finalize before you divorce. This will likely take considerably less time than a Chapter 13 bankruptcy. If you file for divorce first, you have to wait through the applicable period that must elapse between the filing and the finalization before you file for bankruptcy.
We know that this is a hard choice. We can sit down with you and help you determine which order might be the least disruptive to your life.