Couples divorce for many different reasons. Stress and resentment are two factors that can play into the decision to divorce. If you and your spouse are struggling financially, that burden can become almost unbearable. Divorce in itself can be an expensive process. Getting a divorce while already struggling with financial issues can be arduous. The weight of the stress may make you become resentful. It will be hard, but try not to place blame.
Bankruptcy is filed to protect income and property from being taken by creditors.
If you are considering both divorce and bankruptcy, you should carefully think through and mull over the implications of both legal processes.
When should you file for bankruptcy?
If both you and your spouse are thinking about filing bankruptcy, it may make sense to file together.
- If the two of you want to cooperate to clear debt before your divorce, it may help the divorce run more smoothly because there is potential for less debt to divide.
- When you file for bankruptcy, an “automatic stay” is put into place. This makes it so that creditors can no longer contact you. It also puts a freeze on your assets and property so that bankruptcy court can sort through your debts and assets.
- Filing together would allow you and your spouse to save money by splitting the filing and attorney fees.
- Some states allow debtors to choose between state and federal exemption systems. In Kansas you must file for state exemptions. If you are married when filing bankruptcy, each spouse can claim the full exemption amount.
- Kansas is an equitable distribution state. A judge will divide assets in divorce proceeds in a manner that he or she deems fair. This could mean that one party ends up with more of the assets based on debt.
There are two types of bankruptcy that you will consider.
- Chapter 7: Clears most or all of your debt with some exceptions. If you own property, it may be liquidated. There is an income limit to this option.
- Chapter 13: Requires a long term—usually three to five years—payment plan. At the end of the repayment term, some remaining debts will be discharged.