Divorce and Bankruptcy, Which Should Come First?

Last week, I had a question in the mailbag about divorce or bankruptcy, which one should come first? In 2014 (2015 numbers are not out yet) there were roughly 813,862 annulments or divorces granted in the US, and 936,795 filings for bankruptcy. There’s bound to be some overlap, as bankruptcy and divorce are both desperately stressful situations for anyone to be in, much less at the same time. I’m going to put my opinion out there as a general piece of advice. If there is any way to avoid doing both at the same time, file for the bankruptcy first and here’s why.


If you are deeply in debt and can remain on good terms, filing for bankruptcy first is in your best interests. You do not want to add an expensive divorce to the pile of debt that you already have, and knowing what you have left of the marital estate makes it easier to plan what to do going into your divorce. Clearing your debts before you divorce also makes it a lot less likely that you’ll both lose your heads and rack up an insane amount of money in legal fees as you go through the legal process of dissolving your marriage and dividing the marital estate – if this is not already entailed in a prenuptial agreement.

I could tell you stories of how things have gone wrong after both parties went to war in an expensive divorce. I’ve had clients referred to me after a hard-fought divorce depleted the marital estate and the finances of both parties to the point where there was nothing left to do but file for bankruptcy. They had little choice in filing, and had to go through yet another court proceeding after all the emotional and financial toll of what turned out to be a long and toxic fight.

It’s hard to keep your head. I know that, but it is imperative that you do so for your own good and the good of your family. If you are reading this and think that this applies to you, you and your spouse need to make the hard calls. You need to know your entire financial picture before you divorce, present an honest and accurate accounting to the Trustee, and then present an honest and accurate account to the courts to dissolve your marriage. You don’t need a long and expensive fight if you’re already in over your heads with debt.

A consultation is free. Just call the office and set one up, and then come down with your spouse and your paperwork and we’ll start working for a good outcome. Just one thing that anyone filing for a bankruptcy needs to know – a bankruptcy does not negate the obligation to support children of the marriage, or negate any child support payments to a previous spouse caring for children from the prior relationship. That is a matter for the family courts, and it entirely in their purview to raise or lower the payments required.

Talk to Chad Van Horn

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Chad Van Horn

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