Bankruptcy & Divorce | Multi-State Family Lawyers

When Divorce and Bankruptcy Over-Lap

Financial difficulties can lead to major problems in a marriage. One spouse may have accumulated an overwhelming amount of debt, including credit card debt, that the parties cannot possibly re-pay. In these situations, bankruptcy is an option to consider.

At Stange Law Firm, PC, we offer caring and representation for those considering bankruptcy and divorce. Being burdened with debt is hard in itself. Going through a divorce simultaneously can make it tremendously worse. Our attorneys understand and will provide you with the caring, honest advice you need in this situation.

Talk to a St. Louis divorce lawyer about the issues you face. You can also contact us online.

Do I File for Bankruptcy or Divorce First?

For couples who reach the point where divorce and bankruptcy both become options, their most common question is whether they should file for divorce or bankruptcy first. Often, most want to get divorced first and then deal with the debt later. However, as a general matter, we often recommend filing bankruptcy before filing for divorce and, minimally, speaking with a bankruptcy attorney first before you make the decision.

Whether you file for Chapter 7 or Chapter 13 bankruptcy, the critical thing is that you are at least not ignoring the debt issue before getting divorced. That is important for two reasons: (1) Eliminating the debt means that there is one less issue to deal with in the divorce, and (2) you may not be able to extinguish this debt later if you are ordered to pay it pursuant to a marital settlement agreement and divorce decree.

There is a Missouri Court of Appeals decision known as Henderson v. Henderson, which illustrates the difficulties a party might face if they take on debt in a divorce that they cannot afford to pay — with the idea that they can later extinguish it in bankruptcy after the divorce. We did a prior podcast on this topic as well that you can listen to as well: Divorce or bankruptcy first?

Understanding the Limitations of Bankruptcy

If you file bankruptcy during divorce proceedings or after, you could still end up being responsible for debts that were assigned to your ex-spouse by the family court. If your name is on a loan, that’s all that matters to most creditors. Thus, if your ex-spouse stops making payments, the creditor may come after you. This is another reason to consider filing for bankruptcy before filing for divorce. Spousal maintenance (alimony) and child support payments also cannot be eliminated in bankruptcy. While Stange Law Firm, PC, does not practice bankruptcy law, we can refer you to a bankruptcy attorney to help you assess your options.

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