Divorce and bankruptcy

[ruttie]

My husband and I will be filing for BK 7 by the end of March, with a failed business and creditors coming our way for business debt, no employment from a bad economy our only option is to file BK 7. Also added to the pot is that we have decided to divorce after 36 + years. My question is when after we file BK can we file for a divorce? This is totally mutual to both of us, since we are in our 50's and have not really been happy for several years. I guess losing everything makes it easier to walk away from everything. Life sure was alot simplier when we had nothing in the beginning. Someone said that if we file divorce before the BK is discharged, that the automatic stay would cancel out the divorce? If my BK is an asset case, how long would it take to get a discharge, I'm not sure if the trustee will consider what we have that is non-exempt worth anything and abandon it or not.

[Clabbergirl]

First of all, I'm sorry you're facing these decisions. Second, if you've co-signed on anything or have joint accounts for any debts between the two of you - file BK before you file divorce!!!! It might push your divorce back a few months, but it will save you lots of liability problems on down the road. I'm learning this now and what I would give to go back a year and do it the right way.

Say you and your husband split your debts in the divorce - the decree will say you take 2 cards and your husband takes two cards, for example. When you file Chp 7, you have to list all 4 as creditors you owe because you're a cosigner/joint owner on all 4 (assuming it is this way, my apologies if it's wrong). Your debt obligations with these creditors is removed, and the creditors chase after your husband for the balance. He can pay the creditors and then sue you for damages, or charge you with contempt for not upholding the divorce decree. The chp 7 protects you from your creditors, but nothing will protect you from your ex.

Get the BK before the divorce and none of this matters. The BK will wipe clear your debts, neither of you will have to worry about a hold harmless agreement or any kind of contempt issues if either of you fails to do what the decree says.

[ruttie]

thank you clabbergirl, Do you have any idea of the time frame of a asset/no-asset discharge would take?

[Clabbergirl]

I don't know what it is in Arizona, or if that even makes a difference. Here in TN, a Chp 7 takes about 90 days, give or take a little. If you file BK and get the process started, you may be able to file for divorce at some point in the process instead of waiting until the discharge. If you're in a hurry to divorce, maybe you could get specific wording in the decree that doesn't list marital debts, or does so in a way that it's not enforceable as part of the order. That's a question for a lawyer. If you can find a firm that has divorce law and bk law together, that would be ideal. Searching this place for 'divorce' and 'Marital debt' will bring up some discussions about what goes wrong when you file BK after a divorce.

[mikeinsurpri]

i would recommend talking to a good bankruptcy attorney in Arizona first. It sounds like you and your husband are still getting a long, so this may be something that you can plan and work through the bankruptcy and divorce together so both of you have a fresh start afterwards.