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Bankruptcy and Divorce: Everything You Need To Know

Filing for bankruptcy as well as filing for a divorce is both life-defining events. Both instances put a lot of pressure on your mental, emotional, and financial stability. When divorce is mixed with bankruptcy, the possibilities are quite endless, and that is why you need a bankruptcy lawyer in Mesa to guide you through those tough times. If you are faced with both monumental situations simultaneously, it is important to learn as much as possible about each of the processes and how they relate. We have put together some answers to shed light on divorce and bankruptcy.

Should I File Bankruptcy Before or After Divorce?

The decision to file bankruptcy before or after divorce will depend on several factors. If you have already separated from your partner or you are unable to make contact with them for important documents like income stubs and tax returns, it is wise to get on with your divorce proceeding as it’ll be almost impossible to file a joint bankruptcy without contacting your ex. However, if you are still married or in contact with your partner, a joint bankruptcy may be one of the topics to discuss.

Note that debts incurred in your name alone may still be considered community property in marriage. This means that you can file a joint bankruptcy to discharge such debts so that each party isn’t faced with financial difficulties after the divorce. The decision to file for bankruptcy before or after a divorce should be made jointly. If your partner wants no part in the bankruptcy filing, it is best to file after the marriage has been dissolved.

Who Should File Bankruptcy? Me or Us?

Although debts incurred in a marriage can be passed off as community debt, in some cases, spouses may object. In an instance like this, it is natural for the party that has incurred the debt to file bankruptcy. After filing bankruptcy, you should note that the state law bars you from obtaining a home loan for two years. Keeping this in mind, it makes sense for one of the spouses to bear the consequences of the debt and bankruptcy, especially if they intend to obtain a home loan.

Does Filing Bankruptcy Stop Divorce Proceedings?

When you file for bankruptcy, the automatic stay of protection clause is activated. The automatic stay of protection freezes your assets and properties. This stay can hinder your divorce process, especially as properties cannot be shared between the parties involved. To avoid dragging out your divorce proceeding, it is recommended that you wait until your divorce has been finalized. Waiting can also ease the financial burden of both legal processes.

How Long after my Divorce can I File Bankruptcy?

There is no legal wait time for filing bankruptcy. You can begin the process of your bankruptcy filing on the same day that your marriage is dissolved. However, you may not be able to process bankruptcy concurrently with your divorce because the bankruptcy process requires you to present your divorce documents. If you file for bankruptcy within 6 years of your divorce, you will be required to present your divorce documents.

Advantages and Disadvantages of Filing Bankruptcy First

When you file for a divorce first, you get to save more money on attorney fees and filing costs. However, filing bankruptcy first has its advantages too. For example, filing bankruptcy before divorce qualifies you for a higher exemption amount for your assets. An individual bankruptcy filer is allowed as much as $6,000 equity value in a vehicle in Arizona, while a married couple is allowed up to $12,000 equity value. This means that if you have filed bankruptcy while married, you’ll enjoy the higher exemption amounts.

Debts in a divorce can be used as a bargaining chip. One spouse may agree to pay off a certain debt if allowed to keep an item of possession. You lose this bargaining power if you file for bankruptcy first. However, if you file for a divorce first, your spouse may agree to take on and pay off all or part of your debt if allowed to keep your pet, a computer set, or other items. Doing this can significantly save you from the extra cost of hiring a bankruptcy attorney to discharge some of your debts.

Advantages and Disadvantages of Filing Divorce First

Chapter 7 and chapter 13 bankruptcies have different timelines. A chapter 7 bankruptcy lasts 3 to 5 months, while chapter 13 bankruptcy lasts 3 to 5 years. If you are planning a divorce, chapter 13 bankruptcy is not a choice to consider. In addition, you stand a better chance of qualifying for chapter 7 bankruptcy after your divorce proceeding has been completed.

The Arizona state law places the median income for a single individual with no dependents at $51,388. You’ll only be able to qualify for chapter 7 bankruptcy if you earn above this amount but can pass the mean test. However, the median income for a working married couple with no dependent is raised to $64,534. By divorcing your partner first, you can significantly lower the income and pass the mean test.

How to Protect Spouses in a Bankruptcy

If you have filed bankruptcy, the automatic stay of protection becomes activated. As a single individual filing bankruptcy after a divorce, the automatic stay of protection covers you alone. The protection stops creditors from initiating collection efforts, repossessing your vehicle, garnishing your wages, or foreclosing your house. This protection remains active until the case has been finalized. If your bankruptcy is granted, your creditors are permanently forbidden from contacting or harassing you. If denied, your creditors can resume their collection efforts.

More Information On Bankruptcy and Divorce

  • You might need separate attorneys to represent you if you filed bankruptcy in the middle of a divorce or vice versa.
  • You cannot discharge domestic obligations like child support, spousal support, and others in bankruptcy.
  • Filing Chapter 13 bankruptcy before divorce offers you the lien stripping advantage. This can help to discharge junior mortgages if you owe more than your home’s worth.
  • If you have defaulted on your taxes, you’ll be required to pay up before being able to file bankruptcy.
    Some law firms offer full-service legal help to their clients. You can consult these law firms for insight on which to file first. If confused and in need of more information, visit to get started.Arizona Bankruptcy and Debt Solutions
    1013 S Stapley Dr.
    Mesa AZ 85204

Do You Qualify for Bankruptcy?

Filing for bankruptcy isn’t the right solution for everyone. The determination of whether or not bankruptcy is an appropriate debt relief solution for your will be made based on a number of factors including the type and total level of your debt. Use this form to schedule an appointment with one of our bankruptcy attorneys. The consultation is completely free and there is no obligation.