For many married couples, finances are a huge area of disagreement. Especially around the holidays, differences in spending and saving habits may rise to the surface, causing this season of giving to become a season of tension.
Thousands of people like you ultimately decide that divorce is the next natural step after money matters and life stressors make it impossible to remain financially and romantically stable as a couple. Before you take that step, make sure that you know a few of the common myths about bankruptcy and divorce.
Myth 1: Married couples should always file for bankruptcy together
There are certainly advantages to filing for bankruptcy as a couple. For one, a married couple’s finances are often intertwined. Any joint debts, such as credit card debts or a mortgage in both partner’s names, that influence both people’s credit require joint handling. Additionally, some couples prefer to make the investment in the bankruptcy proceedings together rather than double the cost by opening two cases.
However, other considerations may lead you to decide to file for bankruptcy separately before or after a divorce. For some couples, the shared income pushes them above the threshold for Chapter 7 bankruptcy. For others, their financial situations are so different that they cannot take a one-size-fits-all approach. For example, one partner may have student loans that bankruptcy cannot discharge while the other does not.
Myth 2: Filing for bankruptcy after divorce will decrease spousal support payments
Neither Chapter 7 nor Chapter 11 bankruptcy filings affect spousal or child support payments. After a judge assesses you and your partner’s income and financial assets, whatever support obligations stand in the divorce ruling will not fall away after you declare bankruptcy.
For many people, filing for bankruptcy prior to a divorce proceeding allows a better chance to move forward after the divorce with a fresh slate.
In the end, every divorce and every bankruptcy is unique. Finding the right way forward for you could involve a different plan than the more popular ideas about bankruptcy during a divorce.