Generally, when a couple is struggling with financial problems, filing for bankruptcy may be an opportunity for them to get a fresh start. However, if the couple is also contemplating a divorce, they need to understand how filing for bankruptcy can impact the divorce process.
Divorce and Bankruptcy: The Overview
When going through a divorce and bankruptcy at the same time, it is important to note that the bankruptcy process may take priority. This is because the distribution of properties and assets may be delayed until the bankruptcy process is complete.
Consequently, you will have to finish going through bankruptcy before you can finalize your divorce. In addition, because bankruptcy also deals with a person’s debts, it can impact how debts will be handled in the divorce.
Should You File for Divorce or Bankruptcy First?
If you and your spouse have a good relationship, it may be beneficial to file for bankruptcy first, especially if your joint income allows you to file for Chapter 7 bankruptcy. Furthermore, proceeding with bankruptcy can also streamline the property division process, as Chapter 7 can eliminate many unsecured debts, such as:
- Personal loans
- Credit card debt
- Medical and hospital bills
- Utility bills
However, keep in mind that Chapter 7 will not get rid of all your debts. You will still be responsible for child support payments, spousal support, government penalties, and other types of expenses.
Filing For Divorce First
In Chapter 7 bankruptcy, individuals usually receive a discharge after only a few months. In comparison, in a Chapter 13 bankruptcy, the process can last between three to five years because individuals are required to pay back some or all of the debts through a repayment plan.
As a result, due to this timeline, a couple wanting to file for Chapter 13 bankruptcy may consider filing for divorce first because of the time it takes the bankruptcy process to complete.
However, to better understand these options, consider reviewing your specific circumstances with an experienced Georgia bankruptcy attorney. These legal professionals can provide you with valuable guidance on timing issues and assist in identifying the most advantageous approach for your situation.
What Happens If You File for Bankruptcy During a Divorce in Georgia?
When you file for bankruptcy, the court will put an “automatic stay” in place. This will effectively freeze your assets and debts and immediately suspend creditors and lenders from contacting you.
If a divorce is filed, the stay can delay the division of your and your spouse’s assets and debts since the court will not be able to access this information. As a result, the process will need to be placed on hold, which can delay the divorce.
Filing for Bankruptcy in Georgia, Contact Duncan & Brow, Attorneys at Law, LLLP, Today To Go Over Your Legal Options
If you are considering filing for bankruptcy in Georgia but want more information regarding the process, contact the legal team at Duncan & Brow, Attorneys at Law, LLLP. Our Georgia bankruptcy lawyers can assess your situation, determine what legal options you have, and help you get started on the path to financial independence.