Since finances are an oft-cited reason for marital problems, it is not surprising that many who are contemplating a divorce also may be considering whether or not they should also file for bankruptcy.
New Jersey couples may be reluctant to file for bankruptcy right in the middle of a divorce just because that would mean dealing with two different court cases at the same time.
While it may be important to take one case at a time, there can actually be several advantages to going through the bankruptcy process either before or after a divorce.
Bankruptcy can simplify divorce for financially strapped couples
For example, so long as a couple is able to get along reasonably well, they may wish to go through bankruptcy before their divorce.
A Chapter 7 bankruptcy, which can take as short of a time as a few weeks, can allow the couple to clear up, or discharge, most if not all of their marital debt, which means they will not have to worry about dividing it.
Likewise, if they remain legally married, they may be able to protect more of their property from their creditors who otherwise proceeds from the bankruptcy.
Bankruptcy will not discharge all divorce-related debt
On the other hand, not matter when one files, bankruptcy does not relieve a person of all debts related to divorce.
Typically, a person cannot discharge child support obligations or obligations to pay alimony.
Other payments to or on behalf of one’s former spouse may also be non-dischargeable depending on the circumstances, including the exact language of the couple’s divorce decree.
It is important to read over the decree carefully and understand how it may play into a person’s plans to file for bankruptcy. A legal professional with knowledge of both family law and bankruptcy can be helpful in this respect.