If you are facing divorce and considering filing a Chapter 7 or Chapter 13 case, you may be wondering “when is the best time for me to file my bankruptcy case?” The answer is that it depends on your individual circumstances. Below is some general guidance, but it is important to contact us as soon as possible to discuss your options.
Bankruptcy before divorce
If you and your spouse can be amicable and work together on a joint bankruptcy filing, it can be beneficial for both of you. By filing together, you are able to share in the costs associated with your case. Additionally, you can discharge your separate and marital debts, which can make the divorce process easier. By eliminating the majority of your debt, there is less to fight over in your divorce case. This can be especially helpful if you have had significant debt problems.
Bankruptcy during divorce
If you file for bankruptcy protection while your divorce case is pending, it can complicate matters. Your filing can cause delays in the divorce proceedings, which typically frustrates your spouse and causes emotions to run high. While certain aspects of your divorce case can proceed while your bankruptcy case is open, the automatic stay may prevent the division of assets. Your bankruptcy trustee may want to intervene in your divorce case to ensure that the property division is fair, which can make the process more complex and expensive. However, if there are few assets to be administered by the bankruptcy estate, your divorce filing will have little effect.
Bankruptcy after divorce
When you file a personal bankruptcy immediately after your divorce is final, the trustee may scrutinize your marital settlement agreement to determine if the property division was equitable. If the trustee believes that the asset division is not reasonable, your bankruptcy trustee may file an avoidance action. However, this is not a common occurrence because trustees understand how financially damaging divorce can be.
If you are interested in learning more about the timing of your divorce and bankruptcy filing, contact Levitt & Slafkes, P.C. We are experienced in handling a variety of bankruptcy issues. Our offices are conveniently located in South Orange, New Jersey. Please call us at 973-323-2953 or online to schedule your free initial consultation today.