Should You File Divorce Before, After, or During Your North Carolina Bankruptcy?

When you're splitting and in debt, consider this...

Image Source: Flickr User Billie Grace Ward

Are your finances and marriage both on the rocks? If you need a legal intervention for both in the form of divorce and bankruptcy, you should carefully consider the timing of these two life-changing events to get the best results and the fresh start you want from both. So which should you do first? File bankruptcy? Get a divorce? Or do both at the same time?

Do You Have Joint Debts?

If finances are a concern and you have joint debts, a joint bankruptcy filed prior to filing divorce may be preferable. For instance, if both your names are on the mortgage, your house payments are delinquent, and you’re on the verge of foreclosure, filing before divorce can eradicate the debt. It’s also cheaper to file together as a couple, so that’s another consideration.

What is Your Combined Income?

When you file bankruptcy, falling below North Carolina’s median income (i.e. average income) means you can automatically file Chapter 7, which is the most sweeping form of bankruptcy. If you both earn close to the median income, filing separately once you divorce may offer more extensive debt relief. Your bankruptcy attorney can assess your income and advise the best option.

Is the Debt Primarily in One Spouse’s Name?

If the bulk of your debts as a couple are in one person’s name because they’re the breadwinner or had better credit when you started accumulating debt (or any other reason), filing individual bankruptcy will usually work better. Dealing with debt during bankruptcy and divorce can be tricky. Discuss with your North Carolina bankruptcy attorney which timing will work better for you.

Is Your Divorce Acrimonious?

Sometimes divorces are amicable, and sometimes they are not. If you and your spouse can’t get on the same page, you might be better off with separate consultations rather than a joint consultation. You’ll still have to provide info on both your incomes, shared assets, and debts, etc. Rather than filing joint bankruptcy, if recommended, you can each file individual bankruptcy simultaneously.

Will Alimony and Child Support be a Factor?

If one of you will be paying maintenance and/or child support to the other, it might be wise to consult a bankruptcy and divorce attorney at the same time to discuss your finances. Child support and alimony are set based on your income and expenses, so wiping out debt prior to divorce court might cause higher support payments. The bankruptcy court cannot discharge or lower these payments.

A Brighter Financial Future Together

When you’ve decided to call it quits on your marriage, it’s easier if you can be civil to one another during the process, particularly if your marriage is weighed down by excessive debts. Working together to decide on the best approach to bankruptcy and the finances of divorce can result in a brighter financial future for both of you even as you go your separate ways.

Find a Trusted Bankruptcy Attorney to Discuss Your Debt and Divorce

If you’re considering divorce, whether or not you’ve taken the step of consulting a divorce lawyer or triggering any formal legal proceedings, you should let your North Carolina bankruptcy attorney know. This can affect how they advise you to proceed with your bankruptcy plan. Only with complete information can your attorney give you the best advice.

To find out more about NC bankruptcy with or without divorce, contact the Law Offices of John T. Orcutt today. Call +1-833-627-0115 now for a free North Carolina bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro or Wilmington. Get the financial fresh start you deserve!