There are a lot of reasons why people file for bankruptcy – a business venture falls through, unexpected illnesses rack up medical bills, employment opportunities are lost, etc. – but one of the most commonly cited reasons is divorce. Ending a marriage is in no way inexpensive, especially if two spouses cannot see to eye and keep returning to court or working with their attorneys. Matters can also quickly get one-sided when it comes to asset division, and one spouse is left with next to nothing and forced to file for bankruptcy.
The prospect of having both divorce and bankruptcy on the horizon can be understandably overwhelming. To help you prepare for the road ahead, there are a few things you should know:
- Filing fees: You might be filing for bankruptcy due to a divorce taking the last of your finances but that doesn’t mean that filing for bankruptcy is free. Filing fees are, however, the same for a single person and a joint filing. If you and your spouse are willing, file a joint bankruptcy to virtually cut the fees in half, as you are getting essentially two bankruptcies for the price of one. However, if you are able to substantiate to the court that you are indigent, the filing fee might be waived.
- Before or after: If you need to file for bankruptcy before your divorce finalizes, you should consider Chapter 7 bankruptcy since it can be started and completed within a matter of months and it can discharge the entirety of your unsecured private debts. If your bankruptcy filing needs to come after your divorce, an analysis needs to be made to determine which Chapter is recommended. A Chapter 13 bankruptcy takes three to five years to finalize but it can be utilized in situations where the debtors income exceeds the means-test, or where the borrower is seeking to strip a second lien from real estate.
- Property division: You might have access to double the exemptions if you file for bankruptcy jointly, meaning you should complete a bankruptcy analysis before your divorce. In situations where you cannot file jointly, you might want to divorce first, split your property, and then file for bankruptcy so at least some of your property is protected from creditors.
Filing for bankruptcy due to a recently-completed or impending divorce can be a trying process if you are not wholly familiar with bankruptcy laws in New York. If you work with the Law Office of Simon Goldenberg, PLLC, you can get our Brooklyn bankruptcy attorneys on your side to eliminate the guesswork and guide you to a more comfortable tomorrow. For additional information regarding our services, call 888.301.0584 or request a free case review.