Divorce and bankruptcy are among the most stressful situations you can face. Financial issues often prevent Alabama residents from taking action in either of them. Fortunately, you can take steps to eliminate this obstacle and move forward with the rest of your life.
Experian reports that even if you file for divorce and bankruptcy simultaneously, they cannot actually take place at the same time. Property division typically affects assets and debt. As a result, the court may put your petition for Alabama bankruptcy on hold until after your divorce. Whether your divorce occurs before or after bankruptcy depends on your situation.
Bankruptcy first
If you and your spouse can both benefit from Chapter 7, you can file bankruptcy together and split the fees. This form of bankruptcy pays creditors from your liquidated, nonexempt assets. The court then discharges most of the remaining debt. Bankruptcy often simplifies divorce as you have fewer debts and assets involved.
Divorce first
Filing bankruptcy after divorce may make sense if you do not pass the means test for Chapter 7. You may still file for Chapter 13, but the repayment plan that results typically lasts three to five years. This could complicate matters if you divorce partway through the process. If you have a complex divorce, you may benefit from bankruptcy more if you wait until you finalize your split.
The details of your situation might determine whether you file bankruptcy now or after your divorce. Understanding the complexities involved in the bankruptcy code can help you get through the process and begin rebuilding your credit.