Just like a Chapter 7 bankruptcy filing, divorce is a legal action that can require your time, energy, and money to complete. Whether or not you should file for divorce before or after your bankruptcy is dependent on different factors, such as if it is beneficial to you and your spouse.
If you file for bankruptcy prior to divorce, you and your spouse can file jointly. A joint bankruptcy filing allows you and your spouse to combine the bankruptcy exemptions that are normally given to save property up to a certain value. This means that you and your spouse have a better chance of keeping the assets you really want. For instance, if you double a $25,000 exemption by filing jointly, you can use the combined exemption of $50,000 to possibly save your home, car, or other important asset.
However, filing for divorce after a bankruptcy filing could be better if you are having trouble meeting the income requirements to qualify for a Chapter 7 bankruptcy. If you wait, when debts are discharged, you can list your share of the marital debts and have your responsibility for them removed.
The question of whether or not to file an income tax return before or after filing for Chapter 7 bankruptcy occasionally comes up. One of the biggest factors that you can use to decide whether to wait or file your taxes now is how much you are expected to receive for a refund.
If you are anticipating a large refund, it can be considered part of your assets by the bankruptcy trustee. As a result, you could possibly lose the refund in your bankruptcy. However, there is a way you can file your taxes and bankruptcy now, and still keep your refund. You can opt to use your exemption to cover the value of your refund. If you do, the trustee cannot touch it.
There are many other factors that could complicate whether filing for bankruptcy now or waiting is best for you. Your bankruptcy attorney can help you understand what those factors are, if they apply to your particular case, and help you find a way to overcome any problems that arise. To learn more, speak with someone like Julie A Philipi Attorney at Law.