When Your Break-Up Breaks the Bank

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You're getting a divorce and wondering how your incomes will stretch to cover two households. Often, they won't.  That's why many divorcing couples  will file bankruptcy.

Deciding when to file bankruptcy--before, during, or after the divorce--is a tricky question.  You are only allowed to file together while you are still legally married. Once the divorce is final, you can only file singly. 

Sometimes people file together to save money--you  pay one set of legal fees, rather than two.  Usually, filing a bankruptcy will not prevent your divorce from being finalized.   Also, because each of you are discharging your debts, there may be fewer issues to work out in the divorce settlement.   Filing before works well if you can be civil with your spouse and if your situations are roughly similar.  But if one of you is unemployed and the other makes $100,000 a year, this may not be a good idea.    

If you wait to file a bankruptcy until after your divorce is finished, you will have a better idea about what your new budget will look like.  Child support and alimony are just some of the variables that a divorce may determine.    You also have more of a chance to refinance debts.   For example, if you have a car loan jointly with your spouse, you might want to refinance it to get his or her name off the loan. You'll probably stand a better chance of doing that before a bankruptcy is filed.

Every couple and every divorce is different. Talk with an experienced attorney to decide if bankruptcy is right for you, and when.