Photo of Mysti Murphy

Standing Strong for Your Rights

Should I File For Bankruptcy Or Divorce First?


Financial challenges are often factors in marital breakdowns. What should couples do when facing both at the same time?

Financial disagreements are not uncommon between spouses. Many a Texas marriage has been tested through difficult financial challenges. Some have weathered the storm, others have not.

When people have decided that they should get divorced but also are facing unmanageable levels of debt, what are their options? Should they file for bankruptcy and then divorce or should they get divorced and deal with their debts afterwards? How can they know?

The Time Involved

As explained by My Horizon, a Chapter 7 bankruptcy can be completed in a shorter amount time than a Chapter 13 bankruptcy. It may be possible for a Chapter 7 to be initiated and completed before a divorce happens . A Chapter 13 bankruptcy lasts for years. This might either put off a divorce if the bankruptcy is filed jointly or force people to separate their cases if they divorce while the bankruptcy is still active.

The Costs Involved

It is also important to remember that not every bankruptcy must be filed jointly even when people are married. The American Bar Association indicates that married people may choose to file individual bankruptcies if they wish. This may open up different opportunities for people making the choice about whether divorce or bankruptcy should come first. However, filing two bankruptcies will cost more money in the end than filing one.

Individual Or Marital Assets And Earnings

Some people interested in a Chapter 7 bankruptcy may not qualify for one if they earn too much money. Identifying this is important as people who can only file for Chapter 13 may make different choices about how to proceed with bankruptcy and divorce than people who are eligible for Chapter 7.

Additionally, the exemptions allowed for joint bankruptcies are greater than those for single-filer bankruptcies. The impact of this should also be assessed to help determine whether a pre-divorce joint bankruptcy is wise or not.

Property And Debt Division

Chapter 7 bankruptcy eliminates many types of debts. This may simplify divorce in some ways. Chapter 7 bankruptcy may also eliminate some types of assets. While this may result in a simplified divorce, the asset loss may or may not be something that both spouses want. This is one area that should be reviewed carefully to understand how the potential outcome of a pre-divorce bankruptcy might affect a divorce property division settlement.

Talking It Out

Ideally, spouses should discuss these topics thoroughly to make wise financial decisions. However, the reality of a troubled marriage headed for divorce is that such discussions may be tough or even impossible to have. This is just one of the many reasons that working with a lawyer when getting divorced is important. An experienced Texas family law attorney can provide the impartial, balanced view on situations that provide necessary guidance at these times.