Dealing with a divorce and bankruptcy at the same time can be one of the worst things one can experience. You’re overwhelmed by both situations, and you don’t know which one to take care of first. You may not know whether to file for bankruptcy before or after the divorce.
Luckily, if you plan things accordingly, things can get less complicated. So, if you are in a stressful position like this, you should keep reading this article to find out what to do next.
Should You File for Bankruptcy Before the Divorce?
You can only deal with bankruptcy and divorce separately, no matter which you choose to handle first. The two cases cannot take place simultaneously, and even if you file both at the same time, one of them will take over the other. When the two eventually start pending at once, divorce proceedings will take place first whereas bankruptcy is suspended until afterward.
You may think about filing for divorce first because it looks like it’s a simple situation, but in some cases, filing for bankruptcy first is more convenient. Whichever you choose will depend on your situation.
In 2021, Maryland had 5715 total Chapter 7 bankruptcy filings. So, if you live in Maryland and you’re about to go through bankruptcy and a divorce, you may want to look into Southern Maryland bankruptcy lawyers to help you out.
When Is It Better to File for Divorce Before Bankruptcy?
People who file for divorce first and bankruptcy after are usually doing it when they meet the state’s Chapter 7 bankruptcy qualifications. Chapter 7 cancels all qualifying debts, and for someone to meet these qualifications, their income must be lower than the median of the state. This works especially in cases where one spouse is generating all of the income.
When Is It Better to File for Bankruptcy Before Divorce?
Usually, people who opt for bankruptcy before the divorce proceedings are doing it because it can cancel joint marital debts that divorce proceedings would have divided. Spouses can jointly file for bankruptcy that requires them to cooperate. Still, it can help reduce the time commitment and legal fees for both of them.
Many times, a couple that files for bankruptcy can keep a larger part of their assets. They wouldn’t be able to keep the same portion of the assets if they filed for bankruptcy individually after the divorce proceedings. This applies in many states.
Credit Scores After Divorce
Bankruptcy can affect someone’s credit score, and when you deal with this during a divorce case, you should know that both spouses’ credit scores will go down. The same goes for their eligibility for credit cards or loans. If one of the parties withholds payments or decides to use joint debt to hurt the other individual, then things will be even worse.
Whether you file for bankruptcy or divorce first depends on your situation. Analyze the case carefully before making a decision and seek a lawyer’s advice.