Many divorces are partially caused by money problems. We at Mile High Bankruptcy believe that it is often best to file Chapter 7 bankruptcy together before the divorce to remove the arguments over who pays which debts from the divorce, so the parties can concentrate on important issues such as property settlements and issues related to children.
However, this can only be done if the parties are cooperative and there is no other legal conflicts between them. This can only be determined, on a case by case basis, by consultation with an experienced bankruptcy lawyer.
Sometimes it is best for both parties to go their separate ways and file individual bankruptcies after the divorce is over if they cannot cooperate beforehand. Also, after the divorce, sometimes a party is forced to file an individual bankruptcy anyway, even if they thought the other party was going to pay the debts, if the other party does not pay or files bankruptcy on their own.
A good idea is to review this issue with an attorney before the divorce to see which is the best way for you. Often money in attorney’s fees can be saved and the divorce can be less contentious and easier to process if a bankruptcy is filed together.
Remember, the obligations that follow a divorce such as child support, alimony, maintenance, or property settlements cannot be discharged in bankruptcy, so the main focus is to discharge commercial debts against either party and allow both a fresh start.
Finally, we have seen couples reconcile after bankruptcy because they have removed some of the economic problems that caused problems in the marriage. Not always, but it does happen.
Call me, Peter Milwid, at 303-831-0733, if you are facing divorce and money problems and would like and explanation of your options.