Bankruptcy During Divorce: What You Need to Consider Before Filing

By Sheryl Rentz on September 20, 2012

Financial matters are one of the most significant issues that will arise, and need to be settled, in a divorce. Financial problems are certainly one of the leading causes of divorce in the U.S.; as such, managing one’s finances post divorce can often be complicated, and a practical solution for some may be considering filing for bankruptcy during the divorce process to avoid any further monetary troubles. However, there are several important things any Pennsylvanian considering filing for bankruptcy should take into account before making the official decision to do so.

The following are four essential things to consider if you are thinking about filing for bankruptcy during a divorce:

1. Bankruptcy and the divorce process: Filing for bankruptcy during your divorce can slow down the process. Divorce courts are able to make rulings on visitation, child support, custody, and alimony while a bankruptcy is in progress, but decisions cannot be made in regards to property as long as the federal bankruptcy court has control over it.
2. Bankruptcy can’t eliminate certain divorce debts: A divorce decree might order you to make payments to your spouse in exchange for property, but these cannot be wiped out if you file for Chapter 7 bankruptcy. In Chapter 13, however, they can usually be rolled into a payment plan. As bankruptcy filing may not rid you of certain debts, this is important to keep in mind.
3. You may still owe joint debts after filing: Creditors can’t come to you for payment after you have filed for bankruptcy, but they can look to your ex-spouse for payments of debts you signed together. An ex-spouse who has to pay these debts can take you back to divorce court, which will likely order you to pay him or her back.
4. You will still need to pay child support and alimony: If you owe your ex-spouse past due alimony or child support as part of the divorce decree, these debts cannot be erased in a Chapter 7 or Chapter 13 bankruptcy.

Financial matters both before and after a divorce can be difficult to resolve and may become too overwhelming for either party to handle. Deciding to file for bankruptcy may be a sensible decision for some, but a number of things should be considered before doing so as it may or may not solve your financial problems. For questions regarding bankruptcy and divorce, call (610) 645-0100 to schedule a complimentary consultation with Montgomery County bankruptcy in divorce attorney Sheryl R. Rentz, who can help you decide what course of action is best for you, your family, and your future.