How Does Bankruptcy Affect Divorce?
Bankruptcy and divorce are two of the most emotionally and financially significant events of a person’s lifetime, which compounds the stress when they occur at the same time. While you may be tempted to just forge ahead and get things over with, a little bit of planning can reap substantial savings down the road. The attorneys at Nicolet Law Office, S.C., have decades of experience helping clients throughout Wisconsin with this exact situation. We can help you, too.
We offer free consultations to people considering both bankruptcy and divorce.
Does It Really Matter Which One Comes First?
Absolutely. Putting divorce and bankruptcy in the correct order for your situation will make a huge financial difference, not to mention conserving precious emotional resources. Here are some different scenarios:
- Both spouses file bankruptcy jointly prior to divorcing
This makes sense when you both need debt relief, can exempt most or all of your assets, and anticipate a stable financial future. This option is most common in Chapter 7 filings, which wrap up in a matter of months. Choosing this option can save you filing fees and other legal costs.
- One spouse files for bankruptcy before divorcing
This can be beneficial when one spouse has incurred most of the debts, as they can sometimes protect the other spouse from creditors. However, this can be a risky move in Wisconsin, as all of a couple’s assets are considered to be jointly owned, which means they will all be drawn in to the bankruptcy filing.
- One or both spouses file for bankruptcy after divorcing
There are a variety of reasons for doing it this way, including asset protection through the structuring of the divorce, being unable to qualify jointly, or simply because the spouses could not agree on the terms of a predivorce bankruptcy.
What About Alimony And Child Support Payments?
Not all debts can be discharged through bankruptcy, including spousal support and child support payments. If you have debt from missed payments, that debt will still be there after your bankruptcy is complete.
Get The Guidance You Need
Simultaneous bankruptcy and divorce is a complex legal situation that requires an experienced lawyer. Our legal team can help lead you through this difficult, confusing time. Reach out to us through email or else by phone: 715-802-0872. We have office locations in Hudson, Eau Claire and throughout Wisconsin.