Filing Bankruptcy Before or After Getting a Long Island Divorce
Divorce and bankruptcy are often closely related on Long Island. Couples who file bankruptcy may later get a divorce due to financial distress, while individuals who get a divorce may file bankruptcy as a result of being left with a lot of debt after the divorce. If you know you’re likely going to get a divorce and file for bankruptcy, which one do you do first? The answer varies depending on the details of your situation. Here’s what you should know about choosing between filing for bankruptcy before or after getting a divorce on Long Island.
The Type of Bankruptcy You Want to File
The type of bankruptcy you want to file may play a significant role in determining if it’s better to file for bankruptcy before you get a divorce, or after.
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy is typically faster than other types of bankruptcy and frequently can be completed in just a few months. Often, it’s equally beneficial for both spouses to file jointly, discharge their debts, and then divorce after the bankruptcy has been finalized.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy does not allow you to discharge your debts, meaning that you’re required to pay them back on a court-appointed payment schedule that usually lasts 3-5 years. If you decide during this period that you want to get a divorce, you’ll need to go through a separate process to divide the bankruptcy once your divorce decree has been issued.
Your Annual Income & Why It Matters
How much you and your spouse earn together versus how much you will make individually matters when it comes to determining when to file for bankruptcy — before or after your divorce. If, for example, you and your spouse together make too much to qualify for a Chapter 7 bankruptcy, it may be in your best interest to divorce first and then file for bankruptcy after.
Your Relationship with Your Ex-Spouse
If there’s any hostility or animosity between you and your ex-spouse, filing for bankruptcy before your divorce may not be in your best interest financially. To successfully file for bankruptcy, it’s important that your partner provides accurate documentation, be present for court dates, and be willing to work with you and your lawyer. If your ex is hostile toward you, filing for bankruptcy prior to your divorce could simply give them another situation they can use to create difficulty for you.
Consider what assets you brought into the marriage and what assets you’ll likely have going out of it. Then, speak with a lawyer about how to best protect these assets during bankruptcy. Depending on what assets you have and their value, it may be beneficial to file a Chapter 13 bankruptcy prior to your divorce in order to keep your assets.
If your ex has many assets, he or she may be against filing for bankruptcy before you get divorced. This is because debt is often split down the middle in a divorce, while assets that your ex owned prior to the marriage remain theirs, giving them less debt and more to pay it with. If you file for a Chapter 7 bankruptcy prior to your divorce, your ex’s non-exempt assets will be liquidated to pay down the debt as much as possible before discharging the rest. This can be a benefit to you if there’s significant debt but the assets that would be liquidated to pay it don’t belong to you.
Contact a Long Island Divorce Law Firm Today for More Information About Bankruptcy & Divorce
Before making a move either way — toward divorce or bankruptcy — it’s critical that you reach out to an experienced Long Island family law attorney. Each area of law is complex enough on its own and when you combine the two and consider the many ways one can impact the other, things can quickly become complicated. Work with a lawyer you can trust to let you know what your options are. Contact our Long Island divorce law firm for a free consultation today by calling 631-923-1910.
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