Divorce Before Bankruptcy?

[soxfan]

My question involves bankruptcy in the state of: CT

Hi
My wife and I are mid-divorce, but have not even been to court yet. I filed and she was served in February.

Lately we have been communicating OK, and I think there is a chance with the help of a moderator, we can be officially divorced soon.

Although I have tried to avoid it, it is inevitable that I/We need to file for Chapter 7. I talked with a bankruptcy lawyer today who said it would make the divorce much easier if bankruptcy is done first. He was concerned there may be language in the decree that would really complicate the bankruptcy cases.

If I go that route it will be months and months before we get divorced. Neither of us want to wait that long.

So here is my question, can the divorce decree been written up in such a way that it will now bog down the bankruptcy? (if we are totally cooperative with each other) We both prefer to file separately but at the same time.

We have about 45,000 in CC debt with 90% having both names on them.

We decided to both be cooperative with each other. So do you think it would be OK to get the divorce done first?

Thanks
soxfan

[whipster1]

Depends on if the debt is given to you or your STBXW in the divorce. In TX (where I am) all debt incurred during the marriage is considered joint debt, so it is better to get it all discharged before the D. Luckily my STBXW is on board to get the debt discharged first then the D comes afterwards.

Also, your allowable exemptions, and the BK means test are much more favorable when there are more people in the "household".

Good luck.

[HHM]

There is no, one, right answer to the question.

But generally speaking, assuming your wife and you would qualify for chapter 7 bankruptcy (and a 7 was in your best interests), it tends to be more cost effective to do it before the divorce. Reason being, all debt is taken care of in the joint BK, so the divorce decree does not need to worry about dividing debt or determine who is going to be responsible for what.

If there would be non-exempt assets in a joint 7, then it is usually better to do the divorce first, divide the assets...which usually results in each spouse then being able to qualify for chapter 7 without worrying about non-exempt assets.

If either side would end up in a chapter 13, then it is usually better to divorce first.

Your lawyer's concerns are that debts assigned in a divorce decree cannot be discharged. The divorce decree is required to resolve ALL issues in a marriage, which means dividing the responsibility for debt. For example, if you have a joint Chase Master Card, and the divorce decree makes you the responsible party, you can still file BK and discharge your liability to Chase, but your ex-spouse would be on the hook to the bank (assuming the ex spouse does not file BK), and because the divorce decree assigned you responsibility for the debt, your ex-spouse can force you to pay it, notwithstanding your BK.

[soxfan]

Thanks-I am still not sure which way to go.

I/we are also in the middle of getting a loan modification. I have no idea if filing BK will have any effect on that.

The only asset we really have is the condomium we both currently reside in. That and 2 10 year old cars.

I have a headache.

[LuciluS]

Thanks-I am still not sure which way to go.

I/we are also in the middle of getting a loan modification. I have no idea if filing BK will have any effect on that.

The only asset we really have is the condomium we both currently reside in. That and 2 10 year old cars.

I have a headache.

I can empathize with you on the headache part LOL! We started our BK process late last Sept. and finally will get it filed on 9/30/09.

Right in the middle of a loan mod? Did you use your wife's income when submitting the loan papers? I guess the question should be do you need your wife's income for the loan modification? Also, I've read where some people were told by their Attorney's to get the loan mod approved before filing BK.

Go over to the foreclosure section of this forum and read some of the posts about Loan Mods. There are not very many who have been successful in receiving such.

If I were you, I would make a list of questions and sit down with a BK Attorney before going any further on your Loan Mod or Divorce. I would think he/she would tell you to get the Loan Mod completed and hold off on the Divorce since most of your debt is joint.

What could possibly happen is if you get your Divorce first and let's say she gets her BK filed immediately and for some reason it takes you 3 mths. before you get yours filed, those joint credit card companies are going to become 'Leeches' for you until you get your BK filed.

[music12]

i don't know how long the divorce can be expected to take. however, bk takes around 4 months when things go smoothly. you could file a joint bk yet keep talking about the divorce with that moderator so that when the discharge comes, you are pretty much ready with the divorce. my feeling is that filing bk first won't really delay the final divorce. you can resolve everything about the divorce just as long as you file the resolution only after your bk is discharged.

all that assumes, of course, that you will be a ch7. having a ch13 with your STBXW will drive you both insane.