As you go through life, your financial and relationship circumstances may change, and sometimes, these circumstances change at the same time. If you’re going through a simultaneous divorce and bankruptcy, then you will need all the help you can get to handle these complicated legal cases. To get through your divorce and bankruptcy cleanly, you need the help of a divorce attorney in Sugar Land, TX.
Simultaneous Divorce and Bankruptcy? Contact a Divorce Attorney in Sugar Land, TX Right Away
Before we explore how a divorce attorney can help you with your complex divorce case, it’s important to understand a few basic facts. First, during a divorce, most of your assets will be divided evenly, including personal finances and business assets. During a divorce, this can mean you and your partner will be cleanly splitting assets down the middle unless otherwise instructed by the courts.
But bankruptcy can muddy these waters. Bankruptcies are filed when the amount of debt you owe is several times greater than your ability to pay it. Many married people file for bankruptcy jointly, particularly for Chapter 7 bankruptcy. Chapter 13 bankruptcies are generally more complicated even without divorce proceedings.
Can You File for Both At the Same Time?
In short, yes, you can file for divorce and bankruptcy at the same time. Depending on your personal situation, filing for these cases at the same time may make your divorce or your bankruptcy more simple to complete. As a note, each of these cases is filed in different courts – but at the same time, much of the same information about shared assets are used in each case.
Is It Smart to File at the Same Time?
Generally speaking, Chapter 7 bankruptcy cases are easier to file during a divorce than a Chapter 13 bankruptcy. This is because Chapter 7 has exceptions for certain personal property that may allow you to keep some of your possessions even if you and your spouse are living in different households. Chapter 13, on the other hand, mandates that you have a payment plan to keep certain assets (such as a home), which can become unaffordable if you and your spouse have more assets because you are living in different homes.Of course, you and your spouse also have the option of postponing bankruptcy until a divorce is finalized. Or you could file bankruptcy before filing for divorce – although, this may mean that you and your partner are both on the book for the payment plan for up to 3 to 5 years if you file jointly. Filing for a divorce during bankruptcy generally affects your case by way of adding any divided assets to your bankruptcy schedules among other complications.
What Are Some Complications That Happen When You File at the Same Time?
Bankruptcy schedules that collect information about your income and assets have to be financially air-tight – and that means that if you’re still legally married, then your spouse will need to be included in your bankruptcy filing. This can affect your case in many ways, including causing delays in either the divorce or the bankruptcy.
For example, if you and your partner have shared assets, the divorce judge may not be able to divide your assets until your bankruptcy case has concluded or been dismissed. Your bankruptcy case can also be delayed if alimony and child support are new factors during your divorce, since you may need to update schedules. Overall, it’s best to file one case or the other first so simplify your proceedings.
Is It Better to File Bankruptcy After Divorce?
Ideally, filing for bankruptcy after divorce is the smarter financial move. Filing for bankruptcy when you are no longer married makes it easier to fill in your asset schedules and pass the Means Test in Chapter 7 filings or secure a good payment plan for Chapter 13 filings. If you can, waiting until a divorce is finalized before starting your bankruptcy case will simplify things.
Can These Cases Truly Happen Simultaneously?
Whether or not your divorce and bankruptcy can happen at the same time will depend on factors such as your court jurisdiction and state law. In some states, one case will usually have more importance than the other. In fact, most of the time, even if you have filed motions simultaneously, your bankruptcy case will be suspended or delayed until the divorce court has divided assets.
Which Case Should You File First?
Knowing which case to file first will depend on your specific financial and living situation, as well as your preference for each. For example, some people who may be facing bankruptcy may be able to stop paying creditors for a time while divorce proceedings are in the works; as long as creditors are not collecting from your income, this is a sustainable method for several months. If your divorce should be simple and there will not be many assets to divide, then filing for divorce before your bankruptcy is a good idea.
If you and your partner are filing for bankruptcy jointly, or if you are filing bankruptcy at the same time, then it may make more sense to file this case before your divorce case. With this strategy, your assets will be shared, which could lower payment plans or make it easier to pass the Means Test and qualify for full discharge. However, you and your partner will still need to live in the same home for this strategy to work for you, and you may need to continue sharing assets until your bankruptcy is finalized.
When Does Filing Bankruptcy First Make More Sense?
While many legal experts will encourage you to get a divorce before you file for bankruptcy, there are some situations where proceeding with a bankruptcy case before a divorce makes more sense. For example, when you jointly file bankruptcy, you may be able to clear marital debts that would have been divided in the divorce, which ultimately may make it more difficult for a fast divorce. Filing for bankruptcy first can also make it easier to keep your assets, even after a divorce divides those assets.
How Divorce Attorneys Can Help
A divorce attorney will be your number one resource on how to navigate the complexity of simultaneous filings. Your attorney will be able to look at your income, assets, and debts both jointly and separately to help you decide which strategy will be best for your cases. For many, this means filing for divorce first to simplify both processes; for others who may have more assets or larger debts, filing for bankruptcy can be the smarter strategy.
Even if you fill out all of your legal documentation and file your motions for divorce or bankruptcy at the same time, most states like Texas will put the importance of one case before the other. Most of the time, this means your divorce will take precedence over your bankruptcy, which could delay your case. Most people who are facing simultaneous cases find it much easier to complete one case before starting another, as this will ensure you get the best result out of both filings. For more information about how a divorce attorney can help you, contact Skillern Firm in Sugar Land, TX today.