Did you know that someone gets divorced every 10 to 13 seconds in the U.S.? Some of those divorces occur in couples who are also contemplating filing for bankruptcy. What should they do? File or divorce first, or proceed with bankruptcy?
Despite how difficult if may be for an unhappy couple to stay together and live in the same home, in most, but not all, cases it's best to file for bankruptcy first and complete that process before initiating divorce proceedings.
Chapter 7 vs. Chapter 13
To help you understand the differences between Chapter 7 and Chapter 13 bankruptcy filings, here are some explanations:
Chapter 7 Bankruptcy: Also known as liquidation bankruptcy, Chapter 7 allows for the discharge of unsecured debts including credit cards, medical bills and personal loans. In the average case, a person is usually able to exempt all their personal property. The Chapter 7 process can be completed in as little as 90 days, allowing you to begin rebuilding your financial standing and proceeding to the next phase, your divorce.
Chapter 13 bankruptcy: The Chapter 13 process allows you to create an affordable payment plan that gives you the chance to catch up on past due debts. The payment plan, lasting three to five years, gives you the opportunity to pay off lowered settlement amounts to your debtors and discharge your remaining debt once the plan is complete.
Benefits of Filing for Bankruptcy First