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Should a bankruptcy come before divorce?

Money problems commonly lead to marital discord and then to divorce. For potential divorcees who are swimming in debt, questions may arise as to whether they should file for bankruptcy prior to divorce. After all, they probably know that the divorce could involve prickly arguments over who was responsible for particular debts, and how to divide it. At the same time, a bankruptcy could eliminate troublesome debt with one fatal swoop.

Nevertheless, the question of divorce versus bankruptcy is a valid one, so this post will provide some helpful tips in order to answer the question.  

Disputes over payment of debts – As alluded to earlier, a bankruptcy could make disputes over who is responsible for paying certain debts moot even before a divorce petition is filed. After all, certain qualifying debts (i.e. credit card debt, unpaid utility payments, unpaid rent) can be completely discharged, which would eliminate the debate over who pays what.

Dumping underwater property – If the parties are living in a property that they can no longer afford and has little or no equity in it, they may be able to walk away by declaring bankruptcy before getting divorced.

Essentially, a bankruptcy can significantly narrow or even eliminate disputes over property and debt division before a party initiates a divorce. This could help the parties avail themselves to an uncontested divorce if necessary.

As always, the preceding should not be construed as legal advice. Every couple’s situation is different, so having an in-depth discussion as to how a couple can dissolve their marriage in the least expensive way is critical.

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